MASTER 

NEGATIVE 

NO.  94-82023- 14 


COPYRIGHT  STATEMENT 


The  copyright  law  of  the  United  States  (Title  17,  United  States  Code) 
governs  the  making  of  photocopies  or  other  reproductions  of  copyrighted 
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various  international  conventions,  bilateral  agreements,  and 
proclamations. 

Under  certain  conditions  specified  in  the  law,  libraries  and  archives  are 
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"used  for  any  purpose  other  than  private  study,  scholarship,  or  research." 
If  a  user  makes  a  request  for,  or  later  uses,  a  photocopy  or  reproduction 
for  purposes  in  excess  of  "fair  use,"  that  user  may  be  liable  for  copyright 
Infringement. 

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copying  order  if,  in  its  judgement,  fulfillment  of  the  order  would  involve 
violation  of  the  copyright  law. 


Author: 


U.S.  Federal  trade 
commission. 

Title: 

Book-paper  industry 


Place: 


Washington,  D.C 

Date: 

1917 


q^-23tQ;;i^-m 


MASTER    NEGATIVE   * 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


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U.  S.    Federal  trade  commission, 

...  Book-paper  industry.  Letter  from  the  chairman  of 
the  Federal  trade  commission  transmitting  a  final  report 
of  the  findings  of  fact,  together  with  conclusions  and  rec- 
ommendations with  reference  to  the  book-paper  industry 
...    Washington,  Govt,  print,  off.,  1917. 

125  p.    23^'".     (65th  Cong.,  1st  sess.    Senate.    Doc.  79) 

Referred  to  the  Committee  on  printing  August  15  (calendar  day,  August 
21),  1917. 

1.  Paper  making  and  trade — U.  S.       I.  Title. 


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65ti  Congress  / 


SENATE 


No.  79 


BOOK -PAPER  INDUSTRY 


^  P  FROM  THE  CHAIRMAN 
01'      JE  r  DFRAL  TRADE  COI'MF^  ;N 

TBANSMITTI? 


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AUGUS  r  15  (calendar  day,  August  21 ),  1917.— Uifp;  v.' 
the  Conmjitioe  on  PrintinK 


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[S.  Res.  269,  Sixty-fourth  Congress,  first  session.] 

Resolved,  That  the  Federal  Trade  Commission  be,  and  the  same  is 
hereby,  directed  to  investigate  the  increase  in  the  prices  of  the 
various  kinds  of  paper  recjuired  for  printing  and  binding  during  the 
last  year,  and  to  ascertain  and  report,  at  as  early  a  date  as  practi- 
cable, whether  there  have  been  any  violations  of  the  antitrust  acts 
by  any  corporation  in  connection  with  such  advance  in  prices,  with 
sj  ecial  reference  to  the  prices  demanded  for  paper  necessary  for  the 
public  printing  and  binding,  and  also  whether  or  not  the  ^aper  so 
used  w  IS  manufactured  in  the  United  States  or  imported  from  the 
Dommion  of  Canada. 

James  M.  Baker, 

Secretary. 


^f 

u 


CONTENTS. 


pa  OTA 

Letter  of  transmittal 9 

Statement  of  findings,  conclusions,  and  recommendations [ 11 

Findings: 

Principal  findings  of  fact n 

Contract  and  current  prices ......[..  12 

Cost  of  manufacture '.'...'..'...  13 

Profits  of  manufacture 15 

Jobbei-s'  margins  of  profits ....!....!....]!].]!.  16 

Supply  and  demand  factors T 16 

Activities  of  manufacturers '.*.!![.]!.!"  17 

Conclusions 17 

Recommendations jg 

Chapter  I.— Production,  Distribution,  and  Consumption  of  Book  Paper. 

Section  1.  Introduction ^g 

Scope  of  investigation ]  ]  ]  19 

Grades  of  book  paper 19 

Methods  of  packing. .' .'....'... 20 

Principal  uses \ ...........[[...]  20 

Classes  of  publishers .........]].[  20 

Sale  of  book  paper ]!."...""]  21 

2.  Principal  book-paper  manufacturers V..........  22 

Bureau  of  statistics .[  .\\[ . . .  23 

Production,  shipments,  and  stocks 23 

3.  Process  of  production .'.*.*.'." ...'.'.' 25 

Preparation  of  pulp  wood 26 

The  sulphite  process ..V.]. ....[..  26 

The  soda  process ...\[...]."..[  27 

Use  of  waste  paper .'  28 

Paper  making !.!!!]].]!."]  29 

Finishing  processes 30 

4.  Book  paper  jobbers 31 

Exclusive  agencies 32 

Jobbers'  associations ]  ]  ]  33 

5.  Imports  and  exports  of  book  paper  and  chemical  pulp ....[[[[][[[.  33 

Imports  of  book  paper ' "  "  33 

Imports  of  chemical  wood  pulp 34 

Exports  of  wood  pulp 35 

Exports  of  book  paper 36 

6.  Advertising  and  circulation  statistics 36 

7.  Summary  of  supply  and  demand  factors -........*..  38 

Chapter  II.— Prices  op  Book  Paper,  and  Jobbers'  Profits. 

Section  1.  Introduction on 

Sources  of  information 39 

Principal  uses '..'....'  39 

Variations  in  prices 39 

Method  of  presenting  data [[[  40 

2.  Contract  prices 40 

Terms  of  contracts !!]!!!!!!!].  41 

Manufacturers'  prices 1!!!!!!!]"  41 

Jobbers'  prices , ...'.'.'.'.'.'.'....  45 

g 


6 


CONTENTS. 


CONTENTS. 


[r 


Section  3.  Open-market  pricea {i\ 

Open-market  sales  by  jobbers 4H 

Open-market  purchases  by  publishers 49 

4.  Jobbers'  gross  margins  of  profit 50 

Contract  sales 51 

Open-market  sales 53 

Cost  of  doing  business 55 

5.  Additional  cost  of  book  paper  to  contract  purchasers  in  1917 56 

6.  Disparity  and  discrimination  in  prices  in  1916  and  1917 57 

Disparity  in  prices 57 

Discrimination  in  prices 58 

7.  Summary 60 

Increase  in  prices 60 

Causes  of  increase  in  prices 61 

Increase  in  jobbers'  gross  margins 62 

Causes  of  increase  in  jobbers'  gross  margins 62 

Chapter  III. — Costs,  Sales,  and  Profits  of  Manufacture. 

Section  1 .  Introduction 63 

Items  eliminated  from  costs. 63 

Readjustment  of  deprer-iation 64 

Miscellaneous  adjustments 64 

2.  Book-paper  mill  costs,  1915  and  1916 65 

Costs  for  first  quarter  of  1917 66 

Percentage  of  cost 66 

Paper  costs  by  ^oups  of  mills 67 

Paper  costs  by  mdividual  mills 68 

3.  Coated-paper  mill  costs,  1915  and  1916 70 

Percentad:e  of  cost 70 

Costs  of  individual  coating  mills 71 

4.  Soda-pulp  costs,  1915  and  1916 72 

Soda-pulp  costs  for  first  quarter  of  1917 72 

Percentage  of  cost 73 

Cost  of  producing  soda  pulp,  by  groups  of  mills 74 

Advantage  of  paper  mills  proaucing  soda  pulp 74 

5.  Sulphite  costs.  1915  and  1916 74 

Sulphite  costs  for  first  quarter  of  1917 75 

Percentage  of  cost 76 

Cost  of  producing  sulphite,  by  groups  of  mills 76 

Advantage  of  paper  mills  producing  sulphite 77 

6.  Book-paper  mill  profits,  1915  and  1916. '. 77 

Book-paper  profits  for  the  first  quarter  of  1917 78 

Profits  per  ton.  by  groups  of  mills 79 

Coating-mill  profits 79 

7.  Profits  on  investment 80 

8.  Conclusions 81 

Chapter  IV. — Activities  of  Maxufacturkrs. 

Section  1.  The  bureau  of  statistics 83 

Alleged  purpose  of  the  bureau 83 

2.  Abnormal  increase  in  prices 83 

Justification  for  imdue  prices 83 

Methods  used  to  effect  undue  price  enhancement 84 


1. 
2. 
3. 
4. 


3. 

7. 

8. 

9. 

10. 
11. 
12. 

13. 

14. 

15. 
16. 

17. 

18. 

19. 

20. 

21. 

22. 

23. 

24. 

25. 
26. 

27. 

28. 


LIST  OF  TABLES. 

Page. 

Number  of  soda-pulp,  sulphite,  and  paper  mills,  and  daily  capacity  of  book 
paper  mills  operated  by  15  largest  book-paper  manufacturers,  1916 22 

Production,  shipments,  and  stocFs  on  hand  01  23  book-paprr  manufacturers 
belonging  to  the  bureau  of  statistics,  by  months,  1915-1917  (first  half). . .        24 

Quantities  and  proportions  of  materials,  exclusive  of  colors  and  some  miscel- 
laneous items,  used  in  1916  by  three  eastern  and  five  Michigan  companies.        25 

Imports  into  the  United  States  of  printing  paper  for  books  and  newspapers, 
valued  in  excess  of  2h  cents  per  pound,  by  fiscal  years  ending  June  30, 
1912-1917 34 

Imports  of  chemical  wood  pulp,  by  principal  countries,  f  seal  years  ending 
June  30,  1912-1917,  and  by  months,  January,  1915-June,  1917 34 

Exports  of  domestic  wood  pulp,  fiscal  years  ending  June  30,  1912-1917. . .        35 

Exports  of  domestic  printing  paper  other  than  news  print,  fiscal  years  end- 
ing June  30,  1912-1917 36 

Increase  in  total  pages,  advertising  pages,  and  copies  printed,  and  average 
increase  per  issue  of  certain  periodicals,  by  cities,  1916  over  1915 37 

Average  net  prices  per  100  pounds  received  by  23  principal  manufacturers 
in  the  United  States  on  contracts  \\ith  publishers  and  jobbers  for  delivery 
of  white  book  paper  at  purchasers'  sidew  alk,  1913-1916 42 

Average  net  prices  per  100  pounds  received  by  13  eastern  and  10  western 
manufacturers  on  contracts  \^ith  pubUshers  and  jobbers  for  delivery  of 
white  book  paper  at  prrcha'^ers'  sic^ewalk,  1913-1917  Cfirst  quarter) 44 

Average  net  prices  per  100  pounds  received  by  11  eastern  and  10  western 
jobbers  on  contracts  for  delivery  of  white  book  paper  at  purchasers' 
sidewalk,  1914-1916 45 

Average  net  prices  per  100  pounds  received  by  principal  lobbers  in  certain 
cities  for  direct  shipn^ents  on  cpen-marl  et  sales  in  less-than-carload  lots 
of  white   book   paper  delivered  at  purchaeers'  sidewalk,  July,  1915- 
March,  1917,  inclusive 47 

Average  net  prices  per  100  pounds  received  by  jobbers  in  New  York  and 
Chicago  for  direct  shipments  on  open-market  sales  in  carload  lots  of  w  hite 
book  paper  delivered  at  purchasers'  sidewalk,  July,  1915-^:arch,  1917, 
inclusive * 43 

Average  net  prices  per  100  pounds  paid  by  principal  publishers  in  certain 
cities  on  open-market  purchases  in  less-than-carload  lots  of  white  book 
paper  delivered  at  sidew  alk,  1915-1916 49 

Average  gross  profits  of  11  eastern  and  10  western  jobbers  on  contracts  for 
delivery  of  white  book  paper  at  purchasers'  sidewalk,   1914-1916 51 

Average  gross  profits  of  principal  jobbers  in  certain  cities  for  direct  ship- 
ments on  open-market  sales  in  less-than-carload  lots  of  white  book  paper 
delivered  at  purchasers'  sidewalk,  Jub-,  1915-March,  1917,  inclusive 53 

Increases  in  contract  prices  to  be  paid  to  manufacturers  by  certain  pur- 
chasers of  white  book  paper  in  1917,  as  compared  with  prices  paid  in 
1916  for  the  same  tonnages 56 

Net  prices  per  100  pounds  charged  bv  a  certain  manufacturer  on  contracts 
made  in  November  and  December,  1916,  for  delivery  of  white  book  paper 
at  purchasers'  sidewalk  during  1917 60 

Average  cost  of  production  per  ton  of  paper,  for  39  principal  book-paper 
mills,  19l5andl916 ..... ..        65 

Percentage  of  total  cost  of  producing  paper  of  39  principal  book-paper  mills 
attributable  to  particular  items,  1915  and  1916 66 

Cost  of  production  of  paper  in  r9  principal  book-paper  mills,  arranged  by 
groups  according  to  cost  per  ton,  1915  and  1916 67 

Cost  of  production  per  ton  of  paper  of  39  principal  book-paper  mills  bv 
mills,  1915  and  1916 .   '....        68 

Average  cost  of  production  per  ton  of  coated  paper  for  6  coating  mills,  i9i5 
and  1916 79 

Percentage  of  total  cost  of  producing  coated  paper  of  6  mills  attributabie  to 
particular  items,  1915  and  1916 71 

Average  cost  of  production  per  ton  of  soda  pulp  for  ie  mills,  1915  and  1 916.        72 

Percentage  of  total  cost  of  producing  soda  pulp  of  16  mills  attributable  to 
particular  items,  1915  and  1916 73 

Cost  of  production  of  soda  pulp  in  16  mills,  arranged  by  groups  according 
to  cost  per  tan,  1915  and  1916 "....... T        74 

Average  cost  of  production  per  ton  of  sulphite  for  9  mills,  1915  and  0)16.  \ ',        76 


8 


CONTENTS. 


29.  Percentage  of  total  cost  of  producing  sulphite  of  9  mills  attributable  to 

particular  items,  1915  and  1916 yg 

30.  Cost  of  production  of  sulphite  in  9  mills,  arranged  by  groups  accordiJie  to 

cost  per  ton,  1915  and  1916 ...... 77 

31.  Average  sales,  cost  of  sales,  and  profits  per  ton  of  pape^of  ¥9  priiidpal  book- 

paper  mills,  1915  and  1916 ..: ; .,_  yg 

32.  Variations  in  the  profits  per  ton  of  paper  sold  by  39*book-paper  mills,  arranged 

by  groups  according  to  profits  per  ton,  1915  and  1916 ..,        79 

33.  Net  sales,  cost  of  sales,  and  profits  per  ton  of  6  coating'  mills.  1915  and  ipie . .'        79 

34.  Rates  of  profit  on  net  book  investment  of  21  companies,  1915  and  1916 80 

LIST  OF  EXHIBITS. 

1.  Statements  by  paper  manufacturers  regarding  the  causes  of  the  increase  in 

price  in  1916 gy 

2.  The  Print  Paper  Situation  (address  of  Chas.  F.  Moore,  secretary  bureau  of 

statistics.  Book  Paper  Manufacturers,  Oct.  2,  1916) 94 

3.  The  Paper  Situation  (address  of  Alexander  Thomson,  sales  mana«>er  Cham- 

pion Coated  Paper  Co.,  Oct.  26,  1916) t. .'. .  102 

4.  General  conditions  in  the  paper  trade,  and  the  manufacturing  situation  in 

Wisconsm °^^   ^  ,         iiq 

5.  Extracts  from  interviews  with  and  statements  made  bv  jobbers  giving  reasons 

for  the  advance  in  price  in  1916 * ;        t . . .  115 

6.  Extracts  from  interviews  with  and  statements  made  by  publishers  Avin^ 

reasons  for  the  advance  in  price  in  1916 °      119 

7.  Trade  custom.^  as  adopted  by  the  book-paper  divisioii  of  the  Amei-ican  Paner 

and  Pulp  Association,  May  1,  1912,  and  list  of  standard  sizes  and  weights 

of  book  paper 2.23 


LETTER  OF  TRANSMITTAL. 


Federal  Trade  Commission, 

Washington,  August  21,  1917. 
Sir:  By  direction  of  the  Commission  I  am  transmitting  herewith, 
pursuant  to  a  resolution  of  the  Senate  adopted  September  7,  1916, 
the  final  report  of  the  Federal  Trade  Commission  on  the  book-papei 
industry. 

Very  truly,  yours, 

r^,     -r,  Wm.  J.  Harris,  Chairman. 

Ihe  rRESIDENT  OF  THE   SENATE, 

Washington,  D.  G. 


REPORT  ON  THE  BOOK-PAPER  INDUSTRY. 


i^ 


STATEMENT  OF  FIUTDINGS,  CONCLUSIONS,  AND 

RECOMMENDATIONS. 


t 


FINDINGS. 


ACKNOWLEDGMENT. 


The  commission  desires  to  mention  as  especially  contributing  to 
the  preparation  of  this  report  Messrs.  E.  O.  Merchant,  LeClaire 
Hoover,  and  William  T.  Chantland.  Messrs.  F.  L.  Hawes,  W.  W. 
Bays,  J.  K.  Arnold,  and  Richard  J.  Clark  also  rendered  valuable 
assistance. 

10 


The  Federal  Trade  Commission  has  been  engaged  in  an  investiga- 
tion of  the  book-paper  industry,  pursuant  to  Senate  resolution  269, 
Sixty-fourth  Congress,  first  session,  adopted  September  7,  1916 
(Senator  Fletcher),  and  submits  herewith  a  final  report  of  its  findings 
of  fact,  together  with  conclusions  and  recommendations.  A  pre- 
liminary report  was  submitted  to  the  Senate  on  June  13,  1917. 

Book  paper  is  a  general  term  designating  roughly  all  of  the  grades 
of  print  paper  except  news  print.  It  is  used  by  hundreds  of  periodi- 
cals and  magazines,  including  religious,  trade,  and  farm  papers,  and 
also  by  publishers  of  books,  and  is  therefore  vested  with  a  public 
interest  similar  to  that  affecting  news-print  paper. 

There  were  in  1916  approximately  40  companies  operating  70 
mills,  the  bulk  of  whose  output  was  book  paper,  and  a  number  of 
other  mills  which  manufactured  some  book  paper  in  addition  to 
various  other  grades.  The  output  of  the  principal  book-paper  mills 
in  1916  probably  aggregated  more  than  a  million  tons,  valued  at 
more  than  $87,000,000. 

PRINCIPAL   FINDINGS   OF  FACT. 

1.  During  the  year  1916  the  prices  of  the  different  grades  of  book- 
paper  showed  large  increases  over  those  for  the  preceding  year. 
Contracts  made  by  23  manufacturers  in  the  last  half  of  1916  on  the 
average  were  85  per  cent  higher  for  machine  finish,  66  per  cent  higher 
for  supercalendered,  and  65  per  cent  higher  for  coated  book  paper 
than  in  1915.  The  percentage  of  increase  in  current  prices,  except 
on  coated  paper,  for  sales  to  publishers  in  several  large  centers  was 
even  higher. 

2.  The  average  cost  of  manufacture  of  39  principal  book-paper 
mills  for  the  year  1916  was  $7.63  per  ton  higher  than  for  1915,  the 
increase  in  particular  mills  ranging  from  less  than  $2  per  ton  in 
several  cases  to  more  than  $20  per  ton  in  the  most  extreme  case. 
Costs  were  rising  throughout  the  year,  however,  and  for  24  mills  for 
which  cost  data  were  secured  for  the  first  quarter  of  1917  the  cost 
was  $17.35  per  ton  greater  on  the  average  than  for  the  same  mills 
in  the  year  1916.  In  general,  the  increase  in  cost  was  greater  for 
the  mills  purchasing  their  pulp  than  for  those  producing  it. 

3.  The  average  profits  per  ton  of  39  principal  book-paper  mills 
were  nearly  100  per  cent  higher  in  1916  than  for  the  precedmg  year. 
In  some  mills  there  was  no  increase  in  profits,  while  in  others  the 

U 


12 


BOOK-PAPEB  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


13 


ir 


)     I 


mcrease  was  very  large,  the  relation  of  profits  for  the  two  years  de- 
pending upon  the  proportion  of  the  total  output  of  each  mill  sold 
under  old  contracts  at  normal  prices.  The  average  profits  of  24  mills 
for  the  first  quarter  of  1917  were  $20.66  per  ton  higher  than  for  1916 

4.  Ihe  margins  of  profit  of  paper  jobbers  on  book-paper  sales  were 
generally  much  larger  in  1916  than  in  1915.  The  average  increase 
in  margins  on  current  sales  of  machine-finish  book  paper  for  the 
fourth  quarter  of  1916  over  the  third  quarter  of  1915  was  492  per  cent 
for  Boston  jobbers,  200  per  cent  for  the  principal  New  York  lobbers 
and  203  per  cent  for  Chicago  jobbers.  ' 

5.  The  domestic  production  of  book  paper  was  nearly  20  per  cent 
greater  in  1916  than  in  1915,  but  domestic  consumption  and  exports 
increased  more  rapidly,  so  that  stocks  dechned  about  50  per  cent 
Imports  which  have  never  been  large  enough  to  be  a  factor,  are  now 
practically  nothing. 

6.  The  volume  of  advertising  and  the  circulation  of  the  principal 
publications  of  the  country  using  book  paper  showed  a  large  increase 

l^i?^^i.^^®^  ^?^^:    7^^  mcrease  in  pages  of  advertising  printed  bv 
129  leadmg  periodicals  was  29  per  cent. 

7.  Twenty-three  important  book-paper  companies,  producing  from 
75  to  80  per  cent  of  the  total  domestic  output  of  book  paper  are 
members  of  a  statistical  bureau,  of  which  Charies  F.  Moore,  of  New 
York  City,  is  secretary. 

The  concerted  activities  of  the  book-paper  manufacturers,  with 
the  effect  thereof  upon  the  prices  charged  in  1916  and  1917  have 
been  investigated  and  the  commission  lias  instituted  a  proceeding 
directed  against  certain  practices  which  appear  to  exist  in  the  industry! 

CONTRACT   AND   CURRENT   PRICES. 

Contract  and  current  prices  of  several  grades  of  book  paper  were 
obtained  from  manufacturers,  jobbers,  and  pubhshers  for  1915  and 
1916.  The  increase  in  contract  prices  is  shown  by  the  tabulation 
.below  which  gives  the  average  prices  of  23  principal  manufacturers 
for  dehvenes  in  the  territory  north  of  and  including  Virginia,  West 
Virgima,  Kentucky,  and  Missouri,  and  east  of  and  includin<^  Missouri 
Iowa,  and  Minnesota:  ' 

Average  net  prices  of2S  principal  manufacturers  in  the  United  States  on  contracts  with 
pubhshers  and  :obbers  for  delivery  of  white  book  paper  at  purchasers'  sidewalk,  1915 
ana  second  ha  I  J  of  1916.  i    ■^  ^ 

|Per  100  pounds  for  all  quantities.) 


1915 


Machine  finish: 

Eastern  manufacturers 

Western  manufacturers 

Eastern  and  western  combined 
Supercalendered: 

Eastern  manufacturers 

Western  manufacturers 

Eastern  and  western  combined. 
Coated: 

Eastern  manufacturers 

Western  manufacturers 

Eastern  and  western  combined. 


1916  sec- 
ond half. 


J3. 
3. 
3. 

3. 
3. 
3. 

4. 
4. 
4. 


61 
60 
60 

60 
58 
60 

92 
82 

87 


$6.46 
7.03 
6.66 

5.91 
6.95 
5.97 

8.13 
7.97 
8.05 


Increase. 


$2.85 
3.43 
3.06 


Percent- 
age of 
increase. 


31 
37 
37 


3.21 
3.15 
3.18 


7B 
96 
85 

64 
94 
« 

65 

66 
66 


The  increase  in  the  current  or  open-market  prices  of  machine 
finish,  supercalendered  and  coated  book  paper  in  1916  over  1915  is 
shown  by  the  tabulation  following: 

Average  net  prices  paid  by  principal  publishers  in  New  York,  Boston,  Philadelphia,  and 
Chicago  for  white  book  paper  at  purchasers'  sidewalk  on  open-market  purchases,  1915 
and  1916. 

(Per  100  pounds  in  less-than-carload  lots.] 


Machine  finish: 

New  York . . . 

Boston 

Philadelphia. 

Chicago 

Supercalendered: 

New  York . . . 

Boston 

Philadelphia. 

Chicago 

Coated: 

New  York . . . 

Boston 

Philadelphia. 


1915 


First 
quarter. 


$3.92 
4.25 
3.81 


3.71 
4.32 
5.07 


5.86 
5.39 
6.35 


Fourth 
quarter. 


$4.07 
4.22 
3.98 
3.94 

3.62 
4.29 
4.50 
3.87 

5.34 
5.60 
5.89 


1916 


First 
quarter. 


$4.42 
4.45 
4.42 
4.49 

3.88 


54 
40 
03 

30 
69 
01 


Fourth 
quarter. 


$7.55 
7.54 
7.27 
8.32 

6.54 
8.49 
8.49 
6.77 

8.26 
8.61 
8.29 


Increase, 
fourth 

quarter, 

1916,  over 
fourth 

quarter, 
1915. 


$3.48 
3.32 
3.29 
4.38 

2.92 
4.20 
3.99 
2.90 

2.92 
3.01 
2.40 


Percent- 
age of 
increase 


86 

79 

83 

111 

81 
98 
89 
75 

55 
54 
41 


COST   OF   MANUFACTURE. 

Cost  figures  were  obtained  by  accountants  of  the  commission  di- 
rectly from  the  books  of  most  of  the  large  book-paper  manufacturers 
in  the  United  States.  Tliese  figures  were  revised  so  as  to  eliminate 
intercompany  and  transfer  profits  on  materials  and  interest  charges 
and  also  so  as  to  obtain  a  fair  depreciation  charge. 

The  cost  of  manufacture  of  all  the  book-paper  mills  covered  by 
the  investigation  with  one  exception  was  higher  in  1916  than  in  1915. 
In  some  mills  the  increase  in  cost  was  small,  while  in  others  it  was 
large.  This  is  shown  by  the  following  tabulation,  which  gives  a 
comparison  of  the  factory  cost  per  ton  m  1915  and  1916  of  the  two 
mills  having  the  highest  and  lowest  cost,  respectively,  in  1916  and 
also  a  comparison  oi  the  average  cost  per  ton  for  the  two  years  of 
39  principal  book-paper  mills  making  more  than  80  per  cent  of  the 
total  domestic  output. 

Comparison  of  factory  costs  of  principal  book-paper  mills  per  ton  of  paper,  1915  and  1916 

[Net  tons  of  2,000  pounds.l 


1915 

1916 

Increase, 

1916  over 

1915. 

Percent- 
age of 
increase. 

Mill  having  lowest  cost  in  1916 

$53.99 
77.85 

$55.11 
97.32 

$1.12 
19.47 

2.1 

Mill  having  highest  cost  in  1910 

25.0 

Average  cost  of  39  mills 

02.24 

69.87 

7.63 

12.3 

The  above  costs  include  a  depreciation  charge,  amoimting  on  the 
average  to  about  5  per  cent  on  the  investment  in  depreciable  prop- 
erty, and  other  overhead  expenses,  but  exclude  interest  charges  and 


14 


BOOK-PAPER   INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


15 


1 


transfer  profits  on  soda  pulp  and  sulphite  which  several  of  the  com- 
panies produced  themselves.  Soda  pulp,  sulphite,  and  waste  paper 
are  the  principal  materials  used  in  making  book  paper.  They  usually 
constitute  from  50  to  60  per  cent  of  the  total  cost  of  production. 

Generally  speaking,  the  smallest  increases  in  cost  occurred  in  mills 
which  produced  their  own  pulp  and  the  largest  in  mills  which  pur- 
chased it.  Some  mills  purchasing  their  pulp,  however,  secured  their 
suppHes  for  most  of  1916  at  fairly  normal  prices,  but  have  paid  much 
higher  prices  recently.  The  average  cost  of  producing  soda  pulp, 
including  depreciation,  for  nine  companies  operating  16  mills  was 
$35.06  per  ton  in  1915  and  $36.97  in  1916,  an  increase  of  only  $1.91 
per  ton.  Likewise,  the  average  cost  of  producing  sulphite  for  six 
companies  operating  nine  mills  was  $39.12  per  ton  m  1915  and 
$40.12  in  1916,  an  increase  of  only  $1  per  ton. 

In  comparison  with  these  costs  of  sulphite  and  soda  pulp  to  the 
companies  which  produced  them  are  the  prices  paid  by  the  companies 
which  had  to  purchase  these  materials.  The  following  tabulation 
shows  the  average  price  per  ton  paid  by  certain  book-paper  mills  in 
1915  and  1916: 


1915 

1916 

Increase. 

Soda  pulp  (17  mills) 

$42.87 
51.16 

$45.83 
56.61 

$2.96 
5.45 

Sulphite  (20  mills) 

The  highest  average  price  of  soda  pulp  purchased  bv  any  of  these 
companies  m  1916  was  $53.41  per  ton,  and  the  highest  average  price 
of  sulphite  purchased  was  $66.49  per  ton.  Recently  prices  above 
$75  and  $100  per  ton  have  been  charged  on  the  open  market  for 
soda  pulp  and  bleached  sulpliite,  respectively,  with  no  proportional 
increase  m  the  cost  of  production. 

Of  the  39  principal  book-paper  mills  for  which  the  average  cost 
of  book  paper  is  given  above,  29  mills,  representing  about  80  per 
cent  of  the  tonnage,  had  a  cost  below  $70  per  ton  in  1915  and  bebw 
180  per  ton  in  1916.  A  distribution  of  the  39  mills,  according  to 
costs  m  1915  and  1916,  is  shown  by  the  following  tabulation: 


Number  of  mills. 


Between  $50  and  $60. 
Between  $60  and  $70. 
Between  $70  and  $80. 
Between  $80  and  $90. 
Above  $90. 


Total. 


The  Wide  variation  existing  in  the  costs  of  the  principal  book- 
paper  mills  IS  due  not  only  to  differences  in  efficiency  but  also  to  differ  - 
ences  m  the  grades  and  specifications  of  book  paper  manufactured. 

The  above  cost  figures  for  book-paper  do  not  cover  the  cost 
of  coating,  which  is  done  in  separate  mills.  Six  of  the  companies 
whose  costs  were  obtained  operated  coating  mills.  The  average  fac- 
tory cost  for  coated  paper,  including  depreciation,  of  the  six  mills 


operated  by  these  six  companies  in  1916,  was  $95.65  per  ton,  as  com- 
pared with  $77.99  per  ton  in  1915,  an  increase  of  $17.66  per  ton,  or 
22.64  per  cent.  In  computing  these  costs  the  machine-finish  paper 
used  for  coating  is  charged  in  at  cost. 

Cost  figures  for  the  first  quarter  of  1917  were  obtained  from  24 
important  book-paper  mills  in  the  United  States.  The  average  cost 
of  these  mills,  including  depreciation,  was  $65.96  per  ton  in  1916  and 
$83.31  for  the  first  three  months  of  1917,  an  increase  of  $17.35,  or 
more  than  26  per  cent. 

PROFITS   OF   MANUFACTURE. 

The  average  profits  per  ton  of  the  principal  book-paper  mills 
increased  about  100  per  cent  in  1916,  as  compared  with  1915,  show- 
ing that  in  general  average  receipts  at  the  mill  increased  more  rap- 
idly than  costs.  Some  mills  showed  excessively  large  profits  in  1916, 
while  the  profits  of  others  were  only  moderate.  The  tabulation  fol- 
lowing gives  a  comparison  of  the  net  receipts,  costs  of  sales,  including 
selling  expense,  and  profits  per  ton  in  1915  and  1916  of  the  two  mills 
showing  the  lowest  and  the  highest  profits,  respectivelv,  in  1916 
and  also  a  comparison  of  the  average  net  receipts,  costs  of  sales,  and 
profits  of  the  39  principal  book-paper  mills  for  the  two  years: 

Net  receipts,  cost  of  sales  and  selling  expenses,  and  profits  per  ton  of  39  principal  book- 
paper  milh,  1915  and  1916. 


Net  receipts 
per  ton. 

Cost  of  sales 

and  selling 

expenses  per 

ton. 

Profit  per 
ton. 

Per  cent  of 

profit  on  net 

sales. 

1915        1916 

1915 

1916 

1915 

1916 

1915 

19H. 

Mill  with  lowest  profit  in  1916 

Mill  with  highest  profit  in  1916 

$65.85 
82.06 

$83.08 
136. 91 

$61.07 

72.48 

$77.53 
90.38 

$4.78 
9.58 

$5.55 
46.53 

7.4 
11.7 

G.7 
34.0 

Average,  39  mills 

71.39 

86.83 

63.09 

70.32 

8.30 

16.51 

11.6 

19.0 

The  commission  secured  the  book  investment  of  the  21  companies 
operating  the  39  mills,  and  it  was  found  that  the  book  investment 
was  fairly  representative  of  the  cost  of  investment.  On  the  basis  of 
the  book  investment,  the  average  profit  of  these  companies  on  all  of 
their  operations  was  8.7  per  cent  in  1915  and  21.5  per  cent  in  1916. 

The  wide  variation  in  the  profits  of  the  principal  book-paper  mills 
is  shown  by  the  following  tabulation,  which  classifies  the  39  mills 
according  to  profits  per  ton: 


Number  of  mills. 

1915 

1916 

Less  than  $5 

14 
12 

7 
5 
1 
0 
0 
0 

1 

Between  $5  and  $10 

3 

Between  $10  and  $15 

13 

Between  $15  and  $20 

7 

Between  $20  and  $25 

4 

Between  $25  and  $30 

4 

Between  $30  and  $35 

5 

Above$35 

2 

Total 

39 

^^^ 

16 


BOOK-PAPER   INDUSTRY. 


The  average  profits  of  the  six  coating  mills,  whose  costs  are  given 
above  (p.  14),  were  $16.89  per  ton  in  1915  and  $23.26  per  ton  in  1916 
an  increase  of  $6.37  per  ton,  or  37.7  per  cent.  ' 

The  profits  of  24  important  book-paper  mills  were  obtained  for  the 
first  quarter  of  1917.  The  average  profit  of  these  mills  in  1916  was 
$16.55  per  ton,  and  in  the  first  three  months  of  1917  $37.21  per  ton 
an  mcrease  of  $20.66,  or  about  125  per  cent.  The  percentatre  of 
profit  on  net  sales  for  these  mills  was  14.6  per  cent  in  1915,  20.1  per 
cent  in  1916,  and  30.8  per  cent  in  the  first  quarter  of  1917. 

jobbers'  margins  of  profits. 

A  considerable  proportion  of  the  domestic  output  of  book  paper  is 
sold  through  jobbers.  Some  mills  handle  all  of  their  sales  in  this 
manner.  Agents  of  the  commission  obtained  the  purchase  price  and 
sdlmg  price  of  most  of  the  important  jobbers  handUng  book  paper 
These  figures  showed  that  in  1916  jobbers  generally  obtained  a  larger 
margin  of  profit  than  m  1915.  The  tabulation  below  shows  the 
average  margin  of  profit  on  open-market  sales  of  machine  finish 
supercalendered,  and  coated  book  paper  of  the  principal  jobbers  in 
Boston,  New  York,  and  Chicago  for  the  third  and  fourth  quarters  of 
1915  and  first  and  fourth  quarters  of  1916.  The  data  obtained  from 
lobbers  in  Philadelphia,  Baltimore,  Rochester,  Cleveland,  and  other 
large  cities  show  similar  increases. 

Average  gross  margins  of  profit  on  open-marlcet  sales  of  machine  finish,  supercalendered 
and  coated  book  paper  by  jobbers  in  Boston,  New  York,  and  Chicago,  1915  and  1916.    ' 

[Per  100  pounds  in  less-than-carload  sales  for  direct  shipment  from  mill  to  customer.) 


Machine  finish: 

Boston 

New  York . . . 

Chicago 

Supercalendered: 

Boston 

New  York... 

Chicago 

Coated: 

Boston 

New  York . . . 

Chicago 


1915 


Third 
quarter. 


Fourth 
quarter. 


SO.  36 
.30 
.31 

.38 
.49 
.28 

.48 
.48 
.49 


SO.  48 
.30 
.35 

.49 
.41 
.30 

.61 
.48 
.54 


1916 


First 
quarter. 


fO.56 
.44 
.40 

.80 
.61 
.48 

.64 
.61 
.72 


Fourth 
quarter. 


Increase, 
fourth 

quarter, 

191fi,  over 
third 

quarter, 
1915. 


Percent- 
age of 
increase. 


S2.13 

$1.77 

492 

.90 

.60 

200 

.94 

.63 

203 

.49 

.11 

29 

.77 

.28 

67 

.99 

.71 

264 

.73 

.25 

52 

.83 

.35 

73 

1.05 

.56 

114 

SUPPLY   AND   DEMAND   FACTORS. 


The  production  and  shipments  of  22  principal  book-paper  manufac- 
turers operating  42  mills  m  1915  and  1916  were  as  follows: 


1915 

1916 

Increase. 

Percent- 
age of 
mcrease. 

Production 

Tons. 
672,419 
677,809 

Tons. 
803,227 
824,561 

Tons. 

130,808 

146,762 

19.4 
21.7 

Shipments 

BOOK-PAPER  INDUSTRY. 


17 


The  stocks  of  these  mills  declined  from  40,802  tons  on  December 
31,  1915,  to  20,938  tons  on  December  31,  1916,  a  decHne  of  about 
50  per  cent. 

The  exports  of  book  paper,  as  reported  by  the  Bureau  of  Foreign 
and  Domestic  Commerce,  increased  from  15,632  net  tons  in  the  fis- 
cal year  1915  to  64,601  tons  in  the  fiscal  year  1917,  or  more  than  310 
per  cent.  The  total  tonnage  exported  in  1917,  however,  amounted 
only  to  about  6  per  cent  of  the  total  production. 

imports  of  book  paper  declined  from  2,268  net  tons  in  the  fiscal 
year  ending  June  30,  1915,  to  397  tons  in  the  fiscal  year  1917.  The 
imports  of  bleached  and  unbleached  chemical  pulp  from  Norway, 
Sweden,  and  Germany  also  declined  in  1916.  The  imports  of  un- 
bleached wood  pulp  from  these  countries  fell  from  210,201  tons  in 
the  fiscal  year  1915  to  119,473  tons  in  the  fiscal  year  1916,  and  then 
increased  to  221,635  tons  in  the  fiscal  year  1917.  The  imports  of 
bleached  chemical  pulp  from  these  countries  decreased  from  96,763 
net  tons  in  the  fiscal  year  1915  to  43,124  tons  in  the  fiscal  year  1917. 
There  was  a  considerable  increase  in  imports  of  both  bleached  and 
unbleached  chemical  wood  pulp  from  Sweden  in  the  fiscal  year  1917. 

The  increase  in  the  domestic  consumption  of  book  paper  in  1916 
is  indicated  by  the  fact  that  129  publications  in  New  York,  Boston, 
Philadelphia,  Cleveland,  and  Chicago  printed  over  7,000,000,000  more 
pages  in  1916  than  they  did  in  1915,  which  was  an  increase  of  17  per 
cent.  The  increase  in  1916  over  1915  of  17  per  cent  was  due  both 
to  an  increase  in  circulation  and  an  increase  in  the  number  of  pages 
per  issue.  The  increase  in  the  number  of  pages  per  issue  in  turn 
was  due  chiefly  to  the  increase  in  the  quantity  of  advertising  matter 
printed.  The  129  publications  printed  5,000,000,000  more  pages  of 
advertising  in  1916  than  in  1915,  which  represented  an  increase  of 
29  per  cent. 

ACTIVITIES   of  manufacturers. 

The  investigations  of  the  commission  disclosed  that  the  book- 
paper  manufacturers,  especially  those  belonging  to  the  bureau  of 
statistics,  by  correspondence,  meetings,  and  in  other  ways  have 
kept  one  another  informed  of  market  conditions,  prices,  etc.,  so  that 
prices  were  advanced  simultaneously  without  fear  of  competition. 

While  ostensibly  the  duties  of  the  secretary  of  the  bureau  of 
statistics  have  been  to  compile  and  distribute  certain  statistical 
information,  in  reahty  his  principal  efforts  have  been  devoted  to  en- 
couraging members  to  increase  their  prices.  This  was  done  by  cor- 
respondence, use  of  telephone  and  telegraph,  attending  meetings,  and 
holding  personal  conferences  with  members. 

conclusions. 

The  foregoing  findings  of  fact  support  the  conclusion  that  the 
advance  in  the  prices  of  book  paper  in  1916  was  excessive  and  not 
justified  either  by  the  increase  in  cost  or  by  the  changes  in  conditions 
of  supply  and  demand.  The  advance  was  brought  about  in  part 
by  the  activities  of  the  members  and  secretary  of  the  bureau  of 
statistics. 

12159°— S.  Doc.  79,  65-1 2 


18 


BOOK-PAPER  INDUSTRY. 


1 


<  I 


I 


RECOMMENDATIONS. 

In  its  preliminary  report  of  this  investigation,  the  commission 
recommended  as  a  war  emergency  measure  that  all  print  paper 
mills  and  distributing  agencies  operate  on  Government  account 
during  the  continuation  of  the  war  and  that  the  total  product  be 
pooled  in  the  hands  of  a  governmental  agency  so  that  it  might  be 
equitably  distributed  at  a  fair  price  based  upon  cost  of  production 
and  a  reasonable  profit  per  ton.  These  recommendations  the  com- 
mission wishes  to  renew,  since  it  believes  that  under  existing  abnormal 
conditions  immediate  rehef  to  publishers  can  only  be  obtained  by 
the  adoption  of  some  such  legislation. 

The  commission  also  desires  to  call  the  attention  of  the  Congress 
to  the  necessity  for  the  enactment  of  legislation  regulating  the 
activities  of  trade  associations.  The  print  paper  and  other  inves- 
tigations of  the  commission  show  that  trade  associations,  although 
they  are  presumed  to  be  organized  for  legitimate  purposes  and  are 
often  engaged  in  activities  which  serve  a  useful  purpose,  nevertheless, 
in  some  instances,  engage  in  practices  which  tend  to  destroy  compe- 
tition and  defeat  the  objects  of  the  Sherman  law. 

The  commission's  print-paper  investigations  show  that  the  activi- 
ties of  the  trade  associations  connected  with  the  news  print  and  book 
paper  industries,  have  contributed  to  the  rise  in  price  of  these  com- 
modities, and  that  the  effective  regulation  and  supervision  of  such 
activities  by  some  governmental  agency  would  tend  to  restore  healthy 
competition  in  these  industries  and  thereby  to  reduce  prices  to  a 
more  normal  basis. 

Respectfully  submitted. 

William  J.  Harris,  Chairman, 
Joseph  E.  Da  vies, 
William  B.  Colver, 
John  Franklin  Fort. 


CHAPTER  I. 

PRODUCTION,    DISTRIBUTION,   AND    CONSUMPTION    OF    BOOK 

PAPER. 

Section  1.  INTRODUCTION. 

The  investigation  of  the  book-paper  industry  was  made  by  the 
commission  pursuant  to  the  following  resolution  adopted  by  the 
Senate  on  September  7,  1916:  ^ 

Resolved,  That  the  Federal  Trade  Commission  be,  and  the  same  is  hereby,  directed 
to  investigate  the  increase  in  the  prices  of  the  various  kinds  of  paper  required  for 
printing  and  binding  during  the  last  year,  and  to  ascertain  and  report,  at  as  early  a 
date  as  practicable,  whether  there  have  been  any  violations  of  the  antitrust  acts  by 
any  corporation  in  connection  with  such  advance  in  prices,  with  special  reference  to 
the  prices  demanded  for  paper  necessary  for  the  public  printing  and  binding,  and  also 
whether  or  not  the  paper  so  used  was  roanufactured  in  the  United  States  or  imported 
from  the  Dominion  of  Canada. 

Scajpe  of  investigation. — Having  aheady  conducted  an  investigation 
of  news-print  paper,  which  is  the  chief  grade  of  printing  paper  used, 
the  commission  confined  the  present  investigation  to  book  paper, 
which  embraces  practically  all  of  the  grades  of  printing  paper  except 
news  print. 

Data  regarding  prices,  jobbers'  profits,  and  manufacturers'  costs 
and  profits  were  obtained  by  the  commission's  accountants  and  agents 
directly  from  the  records  oi  the  principal  manufacturers,  jobbers,  and 
publishers.  An  examination  was  also  made  of  the  correspondence 
files  of  some  of  the  principal  manufacturers  and  jobbers  in  order  to 
ascertain  whether  there  had  been  any  violations  of  law.  Statistics 
of  advertising  and  circulation  were  furnished  by  the  larger  publishers 
using  book  paper,  as  well  as  other  information  of  value  m  connection 
with  the  investigation. 

Grades  of  hooK  paper. — Book  paper  is  a  general  term  designating 
roughly  all  of  the  grades  of  printing  paper  except  news  print.  The 
distinction  between  book  paper  and  news-print  paper  is  that  the 
former  is  made  of  chemical  pulp  while  the  latter  consists  largely  of 
ground  wood  or  mechanical  pulp.  Standard  news-print  paper  con- 
tains usually  about  80  per  cent  of  ground  wood  and  20  per  cent  of 
sulphite.  Between  standard  news-print  and  book  paper  there  are 
various  grades  of  paper  containing  more  or  less  ground  wood,  such  as 
half-tone  news,  special  news,  novel  news,  catalogue  news,  etc. 

The  principal  grades  of  book  paper  are  machine  finish  (M.  F.), 
sized  and  supercalendered  (S.  &  S.  C.),  coated,  and  cover.  The  dif- 
ference in  the  first  three  grades  lies  mainly  in  the  finish  given  the 
?aper.  Cover  paper  is  a  strong,  heavy  grade  which  is  usually  coated, 
t  IS  used  mainly  lor  the  covers  of  magazines,  catalogues,  etc.     Within 


iSenate  resolution  No.  269,  61tli  Cong..  1st  sess. 


19 


20 


BOOK-PAPER  INDUSTRY. 


i 


i' 


It 


each  of  these  grades  there  are  numerous  variations  in  the  specifica- 
tions for  size,  weight,  color,  etc. 

Machine-finish  book  paper  goes  through  practically  the  same 
process  of  manufacture  as  news  print.  The  only  finish  given  is  that 
obtained  by  passing  it  through  the  calender  rolls  as  it  comes  off 
the  paper  machine.  Some  variation  in  finish  is  possible,  however. 
Several  of  the  different  finishes  classed  as  machine  finish  are  laid, 
wove,  English  finish,  high  bulk,  eggshell,  etc.  ''Laid"  denotes 
certain  markings  on  the  sheet  consisting  of  prominent  vertical  water- 
mark lines  wide  apart,  and  smaller  horizontal  lines  closer  together. 
''Wove"  is  ordinary  machine  finish,  with  fine  equidistant  markings. 
"English  finish"  denotes  a  dull  surface,  and,  in  the  United  States, 
covers  a  number  of  finishes,  all  of  a  high  quality.  '*High  bulk"  is  a 
thick  blotter-like  paper,  which  has  not  been  greatly  compressed. 
"Eggshell"  is  a  rough  finish  in  imitation  of  an  eggshell  surface. 
These  different  finishes  are  made  by  rollers  of  different  designs  while 
the  paper  is  still  moist.  Machine  finish  paper  is  used  largely  by 
publishers  of  books,  and  for  catalogues,  etc. 

Sized  and  supercalendered  paper  is  machine  finish  paper  which 
has  gone  through  an  additional  process  of  sizing  and  calendering  to 
give  it  a  hard,  smooth  finish.  A  large  part  of  this  kind  of  paper  is 
used  by  publishers  of  illustrated  magazines. 

Coated  paper  is  machine  finish  paper  coated  with  a  paste  made 
of  clay,  casein,  starch,  and  other  materials,  and  then  calendered  to 
produce  a  high  finish.  It  is  usually  coated  on  both  sides,  but  is 
sometimes  coated  on  one  side  only.  It  is  used  chiefly  for  high-grade 
illustration  and  lithographic  work.^ 

Methods  of 'packing. — Book  paper  is  furnished  by  the  manufacturers 
either  in  rolls  or  sheets.  Roll  paper  is  used  largely  by  publishers  of 
magazines  and  periodicals,  and  sheet  paper  is  used  by  publishers  of 
booKs  and  for  miscellaneous  purposes.  Sheet  paper  is  packed  for 
shipment  in  several  ways.  The  more  important  are  lapped,  inter- 
lapped,  framed,  and  cased.  The  dijfference  in  price  on  account  of 
packing  is  sometimes  as  much  as  20  or  25  cents  per  100  pounds.  The 
most  expensive  packing  is  in  cases.  High-grade  coated  paper  is  usu- 
ally packed  in  this  way  to  protect  the  high  finish  of  its  surface. 

Principal  uses. — Book  paper  is  used  by  hundreds  of  periodicals  and 
magazines,  including  women's  publications,  mail-order  journals, 
religious,  class,  trade  and  farm  papers,  and  also  by  publishers  of 
books  and  music.  It  is  also  used  in  the  manufacture  of  school  pads, 
cheap  writing  papers  and  envelopes.  Large  quantities  are  used  by 
soap  manufacturers  for  wrappers,  since  they  must  have  a  paper  that 
will  not  be  affected  by  the  alkali  in  the  soap.  It  is  also  used  for 
wrapping  purposes  by  druggists,  chemical  and  patent-medicine 
manufacturers,  and  for  lining  and  covering  fancy  paper  boxes.  Most 
catalogues  issued  by  manufacturers  are  printed  on  book  paper,  and 
many  of  those  issued  by  mail-order  houses  and  others  are  printed 
either  wholly  or  in  part  on  book  paper. 

Classes  of  publishers. — There  are  some  6,000  publications  in  the 
United  States  using  book  paper.  They  include  a  few  daily  and 
weekly  newspapers  and  most  of  the  monthly  and  weekly  publications 


BOOK-PAPEB  INDUSTRY.  21 

of  general  circulation  (magazines  and  weeklies,  women's  publications 
of  home  circulation,  mail-order  publications),  religious,  farm,  class 
and  trade,  and  secret-society  publications.  The  publication  of 
periodicals  other  than  newspapers  is  largely  confined  to  a  few  large 
cities,  especially  New  York,  Chicago,  Boston,  and  Philadelphia. 
Cincinnati  and  Nashville  are  also  important  centers  for  religious  pub- 
lications. The  number  by  classes  of  these  publications  on  January 
1,  1917,  was  about  as  follows: 

Class  and  trade  publications .- "*'  ^00 

Religious ^qq 

Farm 950 

Secret  society 

Publications  of  general  circulation : 

Magazines ^q 

Women's  publications - ^^ 

Mail-order  publications "^      ,  g^ 

Total ^'^^^ 

Of  the  publications  of  general  circulation  106  magazines  have  a  com- 
bined circulation  of  more  than  23,500,000,  37  women's  publications 
about  24,500,000,  and  28  mail-order  pubhcations  about  16,000,000. 
Of  the  850  religious  publications  38  have  a  circulation  of  more  than 
100,000  each,  and  49  of  the  500  farm  journals  exceed  100,000.  The 
circulation  of  very  few  secret-society  or  class  and  trade  pubhcations 

exceed  that  figure.  . 

The  largest  consumers  of  book  paper  are  the  publishers  of  certain 
weekly  and  monthly  magazines.  Several  of  these  concerns  use  more 
than  10,000  tons  a  year  each.  During  the  year  1916,  28  of  the  largest 
publishing  concerns  entered  into  contracts  for  122,158  tons  of  super- 
calendered  paper.  .       , ,  1      .1  ft  a 

Sale  of  hook  paper.— Book  paper  is  sold  by  the  manufacturers  and 
jobbers  either  on  contract  or  m  the  open  market.  The  contracts 
usually  run  from  a  few  months  to  a  year  or  more.    Very  few,  however, 

cover  more  than  one  year.  ,    ^    xi. 

The  manufacturers  sell  part  of  their  output  directly  to  the  consumer 
and  part  to  jobbers.  Manufacturers  east  of  the  Penixsylvania-Ohio 
line  sell  most  of  their  paper  directly  to  the  consumer,  while  those  west 
of  the  Pennsylvania-Ohio  line  and  east  of  the  Mississippi  sell  most  of 
theirs  to  jobbers.  Taking  the  country  as  a  whole,  the  data  secured 
from  the  manufacturers  show  that  the  machine  finish  and  coated 
grades  under  contract  were  sold  largely  to  jobbers,  while  a  very  large 
proportion  of  the  supercalendered  paper  was  sold  directly  to  pub- 
fishers.  In  fact,  most  of  the  important  magazines  use  supercalen- 
dered which  is  bought  directly  from  the  manufacturers  on  annual 
contracts.  Book  pubhshers  and  the  smaller  commercial  users  gen- 
erally buy  from  jobbers  and  frequently  in  the  open  market. 


For  a  full  description  of  the  process  of  manufacture  and  grades  of  book  paper,  see  pp.  25,  30. 


22 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


23 


Y. 


Section  2.  PRINCIPAL  BOOK-PAPER  MANTJPACTTTRERS. 

^i,'^®^®  were  in  1916  approximately  40  companies  operating  70  mills, 
the  bulk  of  whose  output  was  book  paper,  and  a  number  of  other  mills 
which  manufactured  some  book  paper  in  addition  to  various  other 
grades.  The  output  of  the  principal  book-paper  mills  in  1916,  in- 
cludmg  such  other  grades  as  were  made,  probably  aggregated  more 
than  a  million  tons,  valued  at  more  than  $87,000,000. 

The  principal  book-paper  mills  are  located  largely  in  the  north- 
eastern and  north  central  portions  of  the  United  States.  There  are 
no  important  book-paper  mills  in  the  States  south  of  Virginia  and 
West  Virginia  or  west  of  Minnesota,  except  the  Everett  Pulp  & 
raper  Co.,  located  at  Everett,  Wash. 

The  largest  book-paper  manufacturer  is  the  West  Vu-ginia  Pulp  & 
Paper  Co.,  which  has  15  pulp  and  paper  mills  located  in  Virginia, 
West  Virginia,  PeniBvlvania,  and  New  York.  Next  in  order  o(  im- 
portance are  S.  D.  Warren  &  Co.,  Crocker,  Burbank  &  Co.,  Oxford 
Paper  Co.,  Kimberly-Clark  Co.,  Bryant  Paper  Co.,  and  New  York  & 
Pennsylvania  Co.  The  number  of  paper  and  pulp  mills  operated  by 
the  largest  manufacturers  and  the  rated  capacity  of  the  book-paper 
miUs  of  each  company  are  shown  by  Table  1. 

Table  1.— Number  of  soda  pulp,  sulphite,  and  paper  mills  and  daily  capacity  of  book- 
paper  mills  operated  by  15  largest  book-paper  manufacturers,  1916. 


Company. 


West  Virginia  Pulp  &  Pcper  Co 

S.  D.  Warren  &  Co ,'. 

Crocker,  Burbank  <fe  Co 

Oxford  Paper  Co ',[,[, 

Kimberl  v-Clark  Co 

Bryant  Paper  Co ',',',,[ 

New  York  Si  Pennsylvania  Co 

Champion  Coated  Paper  Co.» 

Mead  Pulp  &  PaperCo 

Miami  Paper  Co '.V.'.'.'.'.V. 

King  Paper  Co 

Jessup  <t  Moore 

Ticonderc^a  Pulp  &  PaperCo..!! 

M.  &W.  H.Nixon  PaperCo "' 

Nashua  River  Paper  Co 


Number 
of  soda- 
pulp 
mills. 


Number 
of  sul- 
phite 
mills. 


Total. 


Number 

of  paper 

mills. 


15 


47 


Rated  ca- 
pacity of 
book-paper 
mills. 


200 

200 

180 

175 

150 

130 

130 

82 

80 

GO 

60 

52 

50 

50 


2,189 


» Including  Champion  Fiber  Co. 

The  companies  shown  in  the  above  table  have  a  rated  daily  ca- 
pacity of  50  tons  or  more  of  book-paper  production.  In  addition 
most  of  them  make  other  grades  of  paper.  The  capacity  of  the 
West  Vu-gmia  Pulp  &  Paper  Co.  is  greater  than  that  of  tlie  three 
next  largest  companies.  It  makes  a  specialty  of  supercalendered 
book  paper  for  magazines,  and  in  fact  is  financially  interested  in 
several  publications  which  it  supplies,  the  most  important  of  which 
IS  Collier  s  Weekly.  By  making  a  large  tonnage  of  a  particular  grade 
It  is  able  to  run  its  machmes  continuously  and  thereby  to  produce 
at  a  lower  cost  The  Oxford  Paper  Co.,  New  York  &  Pennsylvania 
Co.,  and  liconderoga  Pulp  &  Paper  Co.  also  make  a  specialty  of 


supercalendered  paper  for  magazines.  Crocker,  Burbank  &  Co.  sell 
most  of  their  output  to  the  Curtis  Publishmg  Co.  In  1916  the 
various  Curtis  publications,  including  the  Saturday  Evening  Post, 
Country  Gentleman,  Ladies  Home  Journal,  etc.,  used  more  than 
50,000  tons  of  machine  finish,  supercalendered  and  cover  paper, 
which  was  about  80  per  cent  of  the  total  output  of  the  eight  mills 
operated  by  the  Crocker,  Burbank  Co. 

Bureau  of  Statistics.— Twenty -three  book-paper  manufacturers,  in- 
cluding slVoi  the  large  ones,  except  Crocker,  Burbank  &  Co.,  Jessup  & 
Moore,  and  Nashua  River  Paper  Co.,  are  members  of  a  statistical 
bureau  organized  in  1914.  The  secretary  of  this  bureau  is  Charles 
F.  Moore,  the  Vanderbilt  Hotel,  New  York  City.  Mr.  Moore  was 
formerly  connected  with  the  West  Virginia  Pulp  &  Paper  Co. 

The  names,  addresses,  and  rated  capacity  of  the  members  of  the 
statistical  bureau  are  as  follows: 


Name. 


Eastern  I 

American  Writing  Paper  Co 

Dill  &  Collins  Co 

Diana  PaperCo 

New  York  &  Pennsylvania  Co. . 

M.  <fe  W.  H.  Nixon  Paper  Co. . . . 

Oxford  Paper  Co 

Ticonderoga  Pulp  &  PaperCo... 

Tileston  &  Hollingsworth  Co 

Wanaque  River  Paper  Co 

S.  D.  Warren  &Co 

West  Virginia  Pulp  &  Paper  Co. 
Western: 

Bardeen  PaperCo 

Bergstrom  Paper  Co 

Bryant  PaperCo 

Champion  Coated  Paper  Co 

Everett  Pulp  &  Paper  Co 

Kimberly-Clark  Co 

King  Paper  Co 

Lakeside  PaperCo 

Mead  Pulp  &  PaperCo 

Miami  Paper  Co 

Monarch  PaperCo 

Rex  PaperCo 


Address. 


Holyoke,  Mass 

140  North  Sixth  Street,  Philadelphia,  Pa. 

Harrisville,  N.  Y 

200  Fifth  Avenue,  New  York  City 

Manayunk,  Philadelphia,  Pa 

200  Fifth  Avenue,  New  York  City 

.-..do 

«  Federal  Street,  Boston,  Mass 

Wanaque,  N.J 

120  Franklin  Street,  Boston,  Mass 

200  Fifth  Avenue,  New  York  City 


Daily 
tonnage. 


Otsego,  Mich 

Neenah,  Wis 

Kalamazoo,  Mich 

Hamilton,  Ohio 

Everett,  Wash 

Neenah,  Wis 

Kalamazoo,  Mich 

Neenah,  Wis 

Dayton,  Ohio 

West  CarroUton,  Ohio. 

Kalamazoo,  Mich 

do 


Total  tonnage. 


42 
42 
30 

130 
50 

180 
52 
28 
24 

200 

590 

25 

35 

150 

130 

34 

175 

60 

8 

82 

80 

35 

15 


2,197 


The  book-paper  manufacturers  belonging  to  the  statistical  bureau 
produce  about  75  per  cent  of  the  total  output  of  book  paper.  They 
furnish  the  statistical  office  each  month  with  a  statement  of  pro- 
duction, shipments,  stocks  on  hand,  unfilled  orders,  etc.,  which  are 
compiled  by  the  secretary  and  sent  out  to  members.  These  figures 
give  the  members  a  very  good  indication  of  the  condition  of  the 
market.  Other  activities  of  the  organization  are  discussed  in  Chap- 
ter IV. 

Production,  sUpmentSj  and  stocTcs.—Tsihle  2  below  gives  the  tons 
produced,  tons  shipped,  and  stocks  on  hand  of  the  23  book-paper 
manufacturers  belonging  to  the  statistical  bureau,  by  months,  since 
January  1,  1915.  These  figures  were  furnished  the  commission  by 
the  secretary  of  the  bureau. 


?' 
h 


24 


BOOK-PAPER  INDUSTRY. 


Table  2.— Production,  shipments,  and  stocks  on  hand  of  £3  boohpaper  manufacturers 
belonging  to  the  Bureau  of  Statistics,  by  months,  1915-1917  (first  half) 


Date. 


1915. 


January... 
February.. 

March 

April 

May 

June 

July 

August 

September . 
October . . . 
November. 
December. 


Total. 


1916. 


January... 
Febniary.. 

March 

April 

May 

June 

July 

August  — 
September . 
October . . . 
November. 
December . 


Total. 


1917.1 


January.. 
February. 
March  — 

AprU 

May 

June 


Total. 


Tons 
produced. 

Tons 
shipped. 

Stocks  on 

hand  at  end 

of  month. 

45,725 

45,107 

40,709 

45,081 

43,776 

41,923 

49, 493 

49,754 

41,444 

49,350 

48,187 

42,736 

46,380 

46,581 

42,515 

46,976 

45,425 

43,720 

46,213 

46,694 

43,626 

48,269 

48.720 

43,248 

48,535 

49,512 

40,461 

51, 5<)6 

53,461 

39,769 

53,027 

64,415 

38,345 

54,769 

58,126 

35,508 

585, 3&4 

589,758 

35,508 

54,639 

56,759 

33,267 

54,200 

57,895 

30,697 

61,950 

68,520 

24,852 

57,785 

61,492 

20,473 

60,392 

60,525 

20,340 

60,015 

61,728 

18,479 

55,254 

55,858 

17,868 

62,453 

62,526 

17,862 

59,090 

58,800 

18,175 

61,471 

62,406 

17,242 

63,888 

62,214 

18,989 

60,200 

62,254 

16,730 

711,337 

730,977 

16,730 

66,549 

64,469 

18,836 

59,293 

57,615 

20,314 

65,272 

66,004 

19,398 

58,397 

54,927 

22,324 

61,391 

59,171 

24,412 

56,661 

53,652 

25,331 

367,563 

355,838 

25,331 

1  In  July  the  members  of  the  Bmeau  of  Statistics  produced  48.664  tons,  shipped  45,361  tons,  and  had 
on  hand  at  the  end  of  the  month  29,260  tons.  In  August  the  production  of  the  members  of  the  Bureau 
of  Statistics  amounted  to  57,582  tons,  shipments  to  56,153  tons,  and  stocks  on  hand  at  the  end  oi  the 
month  to  30,623  tons. 

The  table  shows  that  production  and  shipments  began  to  increase 
and  stocks  to  diminish  in  the  fall  of  1915,  and  with  some  slight 
reactions  this  trend  continued  throughout  the  year  1916.  Since 
January  1,  1917,  the  trend  appears  to  have  changed  and  stocks  have 
begun  to  increase.  The  total  production  of  the  23  companies  in- 
creased from  585,384  tons  in  1915  to  711,337  tons  in  1916,  or  21.5 
per  cent;  shipments  increased  from  589,758  tons  in  1915  to  730,977 
tons  in  1916,  or  23.9  per  cent;  stocks  declined  from  a  maximum  of 
43,720  tons  on  June  30,  1915,  to  16,730  on  December  31,  1916. 
Since  this  date  they  have  increased  to  25,331  tons,  June  30,  1917; 
29,260  tons,  July  31,  1917;  and  30,623  tons,  August  31,  1917. 

Statistics  collected  by  the  commission  from  22  companies  oper- 
ating 42  mills,  some  of  which  were  not  members  of  the  Bureau  of 
Statistics,  showed  the  following  production  and  shipments  in  1915 
and  1916: 


BOOK-PAPER  INDUSTRY. 


25 


1915 

1916 

Increase. 

Percent- 
age of 
increase. 

Pronnntion            . . -.- -.•..--..- 

Tons. 
672,419 
677,809 

Tons. 
803,227 
824,561 

Tons. 
130,808 
146, 762 

19.4 

flhinnipnt^              -      ,,,-,,-.--.------- 

21.7 

The  stocks  of  these  mills  declined  from  40,802  tons  on  December 
31,  1915,  to  20,938  tons  on  December  31,  1916,  a  decline  of  about 
50  per  cent  during  the  year  1916. 

Section  3.  PROCESS  OF  PBODXTCTION. 

All  paper  is  manufactured  by  dissociating  the  cellulose  or  fibrous 
portions  of  various  plants  and  felting  them  together  into  the  kind 
of  ^hpet  desired 

The  body  stock  used  hi  the  manufacture  of  book  paper  is  made  up 
chiefly  of  chemically  prepared  wood  pulp,  waste  paper,  and  occa- 
sionally a  small  quantity  of  rags.  Ground-wood  pulp  also  is  used 
in  varying  quantities  by  some  mills  in  making  the  cheaper  grades 
of  book  paper.  Various  chemical  substances  are  employed  for 
sizing,  loading,  and  coloring  the  paper.  .         i.      , 

The  following  table  shows  the  materials,  exclusive  of  colors  and 
some  miscellaneous  items,  used  in  1916  in  the  manufacture  of  book 
paper  by  three  eastern  mills  making  their  own  pulp  and  five  Michigan 
mills  buying  aU  of  their  pulp: 

Table  ^.—Quantities  and  proportions  of  materials,  exclusive  of  colors  and  some  miscel- 
laneous items,  used  in  1916  by  3  eastern  and  5  Michigan  companies. 


Three  eastern  companies  (pro- 
duction, 291,953  tons). 


Materials. 


Soda  pulp 

Sulphite 

Waste  paper 

Clay,  agaUte,  and  talc. 

Alum 

Rosin 


Five  Michigan  companies  (pro- 
duction, 89,015  tons). 


Quantity. 


Total. 


Tons. 

138,910 

120, 730 

10,063 

67,223 

5,980 

3,310 


346,216 


Pounds 

used  per 

ton  of 

paper 

produced. 


952 

827 

69 

460 

41 

23 


2,372 


Propor- 
tions of 
materials 
used. 


Per  cent. 

40.1 

34.9 

2.9 

19.4 

1.7 

1.0 


Quantity. 


Tons. 
6,949 
26,140 
171,031 
9,885 
4,851 
1,799 


Pounds 

used  per 

ton  of 

paper 

produced 


100.0 


120,655 


156 
587 
1,596 
222 
109 
41 


2,711 


I'ropor- 

lions  of 

materiaU 

used. 


Per  cent. 
5.7 
21.7 
'58.9 
&2 
4.0 
1.5 


100.  J 


1  Includes  a  small  proportion  of  rags. 

The  tabulation  displays  extreme  variation  between  the  two  groups 
of  mills  with  respect  to  the  proportion  of  the  various  materials  used. 
Chemical  wood  pulp  constitutes  75  per  cent  of  the  materials  included  > 
in  the  tabulation  for  the  eastern  mills  and  only  27.4  per  cent  for  the 
Michigan  mills.  Waste  paper,  on  the  other  hand,  makes  up  58.9 
per  cent  in  the  Michigan  mills  and  only  2.9  per  cent  in  the  eastern. 
The  eastern  mills,  compared  with  the  Michigan  mills,  use  a.  relatively 
higher  proportion  of  soda  pulp  as  compared  with  sulphite.    They 


1: 

i 


26 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


27 


it 


also  use  a  greater  proportion  of  ''fillers"  (clay,  agalite,  and  talc)  and 

less  "size"  (rosin).  . 

The  eastern  companies  included  in  the  tabulation  have  their  own 
pulp  mills,  and  make  a  grade  of  paper  used  largely  by  periodicals, 
while  the  five  Michigan  mills  depend  upon  the  market  to  supply  their 
raw  materials,  and  manufacture  mainly  speciahzed  products  requir- 
ing a  variety  of  materials  rather  than  the  continuous  supply  of  cer- 
tain ones  which  would  be  afforded  if  they  owiied  their  own  pulp  nulls. 
Proximity  to  market,  availabihty  of  materials,  and  the  securing  of 
good  manufacturing  conditions  are  the  factors  considered  in  locating 
such  mills.  No  individual  mill,  of  course,  would  use  identically^he 
proportions  exhibited  in  the  tabulation.     It  shows  merely  aggregate 

and  average  figures. 

Preparation  ofpuljrwood.-^ood  fiber  is  the  most  important  paper- 
making  material.  Spruce,  poplar,  and  hemlock  are  used  chiefly,  but 
many  other  varieties  are  used  in  addition.  Wood  to  be  used  for 
making  paper  is  usually  cut  into  2-foot  lengths  and  barked  with  a 
tumbler  or  a  rosser.  The  former  is  a  large  cyhndrical  drum,  installed 
so  as  to  revolve  in  a  sloping  position  in  water.  The  logs  are  passed 
through  the  revolving  tumbler,  and  the  friction  of  the  logs  against 
one  another  and  against  the  side  of  the  drum  removes  the  bark.  The 
second  type  consists  of  a  heavy  iron  disk,  provided  usually  with  three 
knives  fixed  to  its  surface  and  projecting  about  half  an  inch  from  it. 
The  disk  is  rotated  rapidly,  and  when  the  logs  are  pressed  against  its 
surface  the  bark  is  shaved  off  by  the  knives. 

Following  this  the  wood  is  chipped  into  small  pieces  by  a  machine 
which  consists  of  a  heavy  iron  or  steel  disk  about  84  inches  in  diam- 
eter, with  two  or  three  steel  knives  projecting  from  its  surface  and 
radiating  from  the  center.  This  disk  is  caused  to  revolve  rapidly, 
and  the  logs  are  applied  to  the  surface  of  the  disk,  usually  at  an  angle 
of  about  48  degrees.  The  knives  then  chip  off  flakes  of  wood  from 
the  end  of  the  log  at  that  angle. 

In  its  natural  state  wood  contahis  considerable  nonhbrous  material 
in  addition  to  the  cellulose  or  fiber,  which  is  the  material  of  use  in 
paper  making.  This  nonfibrous  material,  chiefly  ligneous  and  resin- 
ous in  its  composition,  is  dissolved  by  some  chemical  which  does 
not  attack  the  cellulose.  Practically  all  wood  pulp  used  in  the  manu- 
facture of  book  paper  is  produced  by  one  of  two  chenucal  processes, 
the  sulphite  or  the  soda  process..  . 

The  sulphite  process.— In  the  sulphite  process  the  wood  chips  are 
cooked  under  pressure  with  a  solution  of  bisulphite  of  hme,  which  is 
prepared  either  by  the  tower  system  or  the  tank  system.  In  the 
tower  system,  which  is  in  most  general  use,  sulphur,  or  m  some  cases 
pyrites,  is  burned  in  specially  constructed  ovens  with  a  hmited  supply 
of  air  so  as  to  form  sulphur  dioxide  gas.  This  is  run  out  m  pipes 
throu<'h  a  tank  of  water  to  cool  the  gas  and  into  tall  towers,  usually 
of  wood,  with  a  lining  of  lead  or  acid-resisting  brick.  These  towers 
may  be  considerably  over  100  feet  in  height  and  from  5  to  10  or  more 
feet  in  diameter.  Limestone  in  small  blocks  fills  up  the  tower  and 
rests  on  wooden  beams  about  10  feet  from  the  bottom  of  the  tower. 
A  continuous  stream  of  water  is  introduced  from  the  top  of  the  tower. 
As  the  gas  passes  upward  through  the  limestone  it  enters  into  com- 
bination with  the  water  and  lime,  so  that  the  liquid  flowing,  out  at 
the  bottom  is  a  solution  of  bisulphite  of  lime. 


In  the  tank  system,  otherwise  called  the  milk-of-lime  system, 
water  and  lune  are  mixed  in  r  large  vat,  and  the  sulphur-dioxide  gas 
is  forced  into  the  mixture  to  form  bisulphite  of  lime.  The  process 
varies  in  detail,  of  course,  from  plant  to  plant. 

The  chemical  process  of  making  sulphite  is  conducted  m  large 
boilers,  commonly  called  digesters.  These  may  be  of  varying  type, 
but  the  one  in  almost  universal  use  is  a  tall  cylindrical  vessel, 
sometimes  of  sufficient  size  to  produce  from  11  to  16^  net  tons  of 
pulp.  The  digesters  are  constructed  of  boiler  plate  and  are  lined 
with  acid-resisting  brick  or  tile  set  in  acid-proof  mortar.  This,  of 
course,  is  to  prevent  the  acid  developed  in  the  process  from  corroding 
the  metal  of  which  the  digester  is  constructed,  but  has  also  the  further 
advantage  of  effecting  a  considerable  saving  in  steam,  because  of  the 
fact  that  this  fining  acts  as  a  heat  insulator.  The  digesters  are 
rounded  at  the  top  and  taper  to  a  cone  at  the  bottom. 

The  process  of  cooking  varies  considerably  in  different  plants.  In 
general,  after  the  chips  of  wood  and  the  bisulphite  of  lime  have  been 
introduced,  steam  is  forced  in  gradually  at  the  bottom.  The  pressure 
reaches  about  80  pounds  and  the  temperature  about  325°F.  The 
process  of  cooking  is  continued  about  eight  hours.  At  the  end  of  the 
cooking  process  the  outlet  at  the  bottom  of  the  digester  is  opened, 
and  the  steam  pressure  quickly  forces  the  material  out  into  a  large 
bin  with  a  screen  bottom,  through  which  the  liquid  drains  off.  At 
this  point  the  pulp  is  washed  usually  for  about  three  hours  by  nieans 
of  water  deUvered  at  the  top  of  the  bin.  The  figneous  and  resinous 
portions  of  the  wood,  being  in  solution  to  a  great  extent,  are  washed 
away.  Spruce-wood  pulp  obtained  in  this  manner  contains  about  88 
per  cent  of  cellidose,  while  untreated  spruce  wood  contains  only  about 

55  per  cent. 

Most  of  the  material  other  than  the  cellulose  goes  to  waste.  Con- 
siderable sulphur-dioxide  gas  is  liberated  when  the  mixture  in  the 
digesters  is  heated,  and  is  used  again  in  making  bisulphite  of  lime. 
Alcohol  is  made  from  the  waste  liquor  in  some  cases  by  adding  a 
ferment  and  distilling  in  the  ordinary  way. 

A  considerable  proportion  of  the  sulphite  pulp  used  in  book  paper 
is  bleached  by  treating  with  a  solution  of  chloride  of  hme. 

The  soda  process.— In  preparation  for  the  soda  process  the  wood 
usually  is  chipped  finer  than  for  the  sulphite  process.  After  being 
chipped  it  is  cooked  under  pressure  in  a  digester,  with  an  alkaline 
solution  to  dissolve  the  nonfibrous  portions.  The  prevailing  type 
of  digester  is  constructed  of  five-eighths  inch  plate  steel,  is  of  cylin- 
drical shape  with  a  rounded  top  and  conical  bottom,  and  its  installa- 
tion is  in  a  stationary  vertical  position.  The  digesters  usually  are 
28  feet  high  and  7  feet  in  diameter,  and  their  capacity  is  4  cords  of 
wood  and  3,500  gallons  of  hquor.  The  wood  and  the  cooking  mate- 
rial are  introduced  through  a  manhole  at  the  top,  and  the  wood  rests 
on  a  circular  screen  stretched  across  the  digester  near  the  bottom. 
The  manhole  is  closed  and  five  steam  is  introduced  between  this 
screen  and  the  bottom  of  the  digester.  The  boiling  is  carried  on 
at  a  gradually  increasing  pressure  for  about  two  hours,  at  the  end 
of  which  time  a  maximum  pressure  of  about  120  pounds  is  attained. 
This  pressure  is  maintained  for  an  additional  eight  hours,  during 
which  time  a  maximum  temperature  of  330°  F.  is  reached.  At  the 
end  of  the  cooking  process  the  lower  manhole  is  opened,  and  the 


I 


28 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


29 


INI 


steam  pressure  blows  the  pulp  and  liquor  into  a  pit  below  the  digester. 
After  being  washed  the  pulp  is  screened  and  bleached  in  preparation 
for  the  paper-making  process.* 

The  material  used  in  this  process  for  dissociating  the  fibers  is 
caustic  soda.  This  material  is  produced  commercially  generally  by 
treating  a  dilute  solution  of  sodium  carbonate  with  lime. 

From  80  to  92  per  cent  of  the  alkali  charged  into  the  digester  is 
recovered  and  used  again  in  a  subsequent  operation. 

The  pulp  is  dumped  from  the  blow  pits  under  the  digester  into 
pans  with  fine  screen  bottoms.  The  Uquor  and  the  resinous  and 
ligneous  portions  of  the  wood  it  holds  in  solution  drain  through  the 
screen.  Hot  water  is  used  to  wash  the  pulp  clean  of  the  liquor. 
The  solution  is  concentrated  in  evaporators  to  a  tar-hke  consistency. 
This  so-called  black  Uquor  then  is  ted  into  steel  cylinders  lined  with 
fire  brick,  which  are  called  incinerators.  These  are  14  feet  long  and 
8  feet  in  diameter,  are  moimted  horizontally  on  rolls,  and  revolve  at 
the  rate  of  two  revolutions  per  minute.  Heat  is  appMed  and  causes 
the  remaining  hquor  to  be  vaporized  and  the  organic  matter  to  be 
carbonized.  The  substance  remaining  is  carbon  and  carbonate  of 
soda,  which  comes  out  of  the  incinerators  in  sohd  form  and  is  known 
as  black  ash.  The  black  ash  is  leached  with  hot  water  which  dis- 
solves the  sodium  carbonate,  and  the  solution  is  run  into  the  caus- 
ticizing  tanks.  Burned  lime  is  added,  which  is  slaked  upon  coming 
in  contact  with  the  water  and  then  reacts  with  the  sodium  carbonate 
to  form  caustic  soda,  which  then  is  used  again  in  the  production  of 

pulp. 

Use  of  waste  paper. — A  considerable  quantity  of  fiber  for  paper 
making  is  derived  from  old  paper.  In  the  first  place  a  considerable 
quantity  of  torn  and  otherwise  unsalable  paper  accumulated  in  the 
mill  is  turned  back  into  the  beaters  and  used  again  for  paper  making. 
Trimmings  and  other  clean  waste  paper  are  purchased  from  printers 
and  pubhshers  and  used  in  the  same  manner.  Tliis  kind  of  paper 
does  not  require  any  special  treatment. 

Printed  papers  also  are  used  in  large  quantities  by  some  mills, 
frequently  m  the  form  of  old  magazines.  Much  high  grade  rag  paper 
is  used  in  conjunction  with  wood  pulp.  The  printing  ink  causes 
difficulty  in  the  use  of  printed  papers. 

Black  printing  ink  is  composed  generally  of  carbon,  held  in  solu- 
tion by  an  oil  such  as  hnseed  oil  or  pine  oil.  When  applied  to  the 
surface  of  the  paper  the  volatile  part  of  the  oil  evaporates,  leaving 
an  adhesive  substance  which  holds  the  particles  of  carbon  together 
and  causes  the  whole  mass  to  adhere  to  the  paper.  The  problem  in 
ushig  old  papers  consists  in  dissolving  the  printing  ink,  and  then  in 
removing  the  pigment  without  soihng  the  mass  of  moist  pulpy  ma- 
terial with  which  it  is  mixed.  The  common  procedure  is  to  boil  the 
paper  with  an  alkahne  solution,  usually  soda  ash,  which  has  the  qual- 
ity of  breaking  up  the  dried  oil  wliich  holds  together  the  pigments  in 
the  ink.  It  also  attacks  the  rosin  with  which  the  paper  is  sized  and 
thus  helps  to  disintegrate  the  paper  stock  as  a  whole.  Three  types 
of  machines  are  in  general  use:  (1)  rotary  boilers,  (2)  open-air  cook- 
ers, and  (3)  inclosed  engine  cookers.     The  open-air  cooker  is  used 

'An  excellent  description  of  the  process  of  manufacture  of  soda  pulp  and  sulphite  is  found  in  Department 
of  Commerce,  Bureau  of  Foreign  and  Domestic  Commerce,  Special  Agents  Series,  No.  110,  By-Products 
of  the  Lumber  Industry,  by  H.  K.  Benson,  pp.  42-49. 


most  generally,  and  consists  merely  of  a  large  tank  in  which  the  cook- 
ing hquor  is  allowed  to  boil  up  through  pipes  and  thence  pour  out 
and  settle  down  through  the  paper,  thus  insuring  uniform  treatment 
throughout  the  mass.  The  inclosed  engine  cooker  is  of  various 
types.  Sometimes  a  pressure  of  about  5  pounds  is  maintained.  In 
some  types  a  sort  of  beating  action  is  communicated  to  the  mass. 
Care  must  be  exercised  not  to  knead  the  ink  into  the  fibers.  A  new 
type  'installed  in  one  mill  utihzes  the  action  of  rapidly  turning  pro- 
pellers to  drive  the  pulp  through  a  pipe  attached  to  the  boiler,  and 
the  churning  motion  thus  developed  tends  to  remove  the  ink  and 
disintegrate  the  fibers.  Whatever  the  type  of  machine  employed, 
the  alkaline  solution  supporting  the  carbon  particles  must  be  washed 
out  of  the  mass  of  pulp  thoroughly.  Then  the  pulp  may  be  run  into 
the  beaters  for  a  brief  period  and  mixed  with  other  stock  in  varying 

proportions.  -i      •        • 

Paper    malcing.— The    paper-making    process    proper    begins    in - 
the  beaters,  where  the  various  component  substances  of  the  finished 

product  are  mixed.  ,        ,        •        .  .1      •  ^     ^ 

The  beaters  are  large  receptacles  of  various  types,  the  important 
common  characteristic  of  which  is  a  cylindrical  roll  fitted  with  steel 
or  bronze  blades,  which  revolves  over  a  stationary  concave  bedplate 
equipped  with  similar  blades.  The  pulp  is  caused  to  circulate  in  the 
vat  so  that  all  of  it  will  pass  under  this  roll  about  an  equal  number 
of  times.  At  the  beginning  of  the  operation  the  roll  is  raised  slightly 
above  the  bedplate  and  then  gradually  lowered  as  the  operation  is 
continued,  until  the  fibers  have  been  sufficiently  torn  apart  and  the 
various  ingredients  have  been  thoroughly  mixed.  " 

The  chemicals  used  are  added  to  the  pulp  m  the  beaters.  Clay, 
agalite  or  talc  are  introduced  as  a  filler.  This  material  fills  the 
spaces  between  the  fibers,  renders  the  paper  more  opaque,  and  gives 
it  a  smoother  surface.  If  added  to  excess  it  causes  the  paper  to 
be  inferior  in  strength.  Liquid  rosui  is  added  to  size  the  paper  so 
that  the  printing  ink  will  not  be  absorbed  and  thus  cause  the  im- 
pressions to  become  blurred.  Coloring  materials  as  desired  axe 
added.  Alum  also  is  introduced  to  precipitate  the  rosin  and  the 
coloring  matter  upon  the  fibers.  •   .       .1  v. 

The  beating  process  is  very  important  m  determining  the  quality 
of  paper  to  be  produced.  In  the  first  place  the  mixture  of  the  ma- 
terials is  of  extreme  importance  in  this  regard.  Thus,  a  large  pro- 
portion of  soda  pulp  makes  possible  the  production  of  a  soft,  artistic, 
opaque  paper  of  good  printing  quahties.  A  lar^e  proportion  of 
sulphite  on  the  other  hand,  insures  strength  and  hardness.  Ex- 
treme care  must  be  exercised  in  the  use  of  waste  paper  m  order  to 
produce  a  product  of  a  given  quality.  In  the  second  place,  the 
beatintr  process  is  extremely  important  from  the  mechanical  point 
of  view  If  the  roll  is  let  down  too  rapidly  or  too  far  upon  the  bed- 
plate the  pulp  may  be  spoiled.     Experienced  beater  men  are  essential 

to  produce  the  best  results.  i_  .  i.     ^1 

In  some  plants  the  beating  process  is  shortened  somewhat  by  the 
use  of  the  so-called  Jordan  refining  engine.  This  machine  consists 
of  a  hollow  cone  equipped  on  its  interior  surface  with  blades  and 
another  smaller  cone  with  blades  on  its  exterior  surface.  The 
smaller  cone  revolves  within  the  larger  one,  and  the  pulp  is  reduced 
to  the  desired  consistency  by  the  action  of  the  blades. 


30 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


31 


After  the  beating  process  has  been  completed  the  pulp,  mixed 
with  a  great  quantity  of  water,  is  run  into  a  so-called  stuff  chest,  in 
which  it  is  kept  in  constant  motion  to  prevent  the  pulp  from  settling 
to  the  bottom.  From  this  chest  the  slush  passes  through  a  strainer 
and  into  a  long  narrow  box  placed  at  the  head  of  and  across  the  full 
width  of  the  paper  machine.  Thence  it  overflows  onto  a  wire-screen 
belt  woven  with  60  or  70  meshes  to  the  inch.  The  length  of  this 
screen  may  be  well  over  50  feet  and  the  width  150  or  more  inches. 
This  belt  moves  forward  on  a  series  of  3-inch  rolls,  and  also  has 
a  lateral  shaking  motion.  The  pulp  settles  down  upon  this  screen 
in  the  form  of  a  wet  sheet,  much  of  the  water  draining  through  the 
mesh  of  the  screen.  Toward  the  farther  end  of  the  screen  it  passes 
over  vacuum  boxes,  which  cause  still  more  moisture  to  be  forced 
through  the  screen. 

If  it  is  desired  to  mark  the  paper  in  a  distinctive  manner,  a  dandy 
roU  is  placed  above  the  vacuum  boxes.  This  device  consists  of  a 
cyhndrical  roll  covered  with  raised  wires  in  the  form  of  the  desired 
pattern.  If  a  screen  like  the  one  supporting  the  sheet  is  used,  the 
so-called  wove  paper  is  produced.  Watermarks  showing  the  trade 
name  of  the  paper  are  sometimes  used. 

The  screen  may  be  run  at  500  or  more  feet  per  minute.  Mills 
manufacturing  large  quantities  of  a  standardized  product,  such  as 
magazine  paper,  usually  have  wide  and  fast  machines,  while  those 
making  up  many  special  orders  find  smaller  and  slower  machines 
more  advantageous. 

At  the  end  of  the  screen  the  sheet  passes  between  two  rolls  called 
the  couch  rolls,  the  upper  one  of  which  is  covered  with  a  felt  jacket. 
From  the  screen  belt  the  sheet  runs  onto  a  woolen  belt.  While  sup- 
ported by  this  belt  it  passes  between  a  series  of  so-called  press  rolls, 
the  purpose  of  which  is  to  press  out  further  quantities  of  water.  The 
sheet  then  is  run  over  a  number  of  large,  hollow  cast-iron  cylinders 
3  or  4  feet  in  diameter,  heated  by  steam.  These  rollers  dry  the  paper 
thoroughly.  The  sheet  is  then  passed  between  a  series  of  smaller 
rollers,  called  calender  rolls,  to  impart  finish  to  the  paper  which  is 
then  wound  upon  a  roll. 

Finishing  processes. — Three  main  types  of  surface  finish  are  dis- 
tinguished in  the  manufacture  of  book  paper,  i.  e.,  machine  finish, 
supercalendered,  and  coated.  Machine-finish  paper  is  ready  to  be 
packed  and  shipped  when  it  leaves  the  paper  machine.  The  other 
grades  require  additional  treatment. 

The  finish  imparted  to  the  paper  may  be  varied  considerably  in 
several  different  ways.  The  materials  used  in  the  paper  will  have 
some  effect,  and  the  use  of  the  dandy  roll  on  the  paper  machine  makes 
possible  other  variations.  Finally,  the  process  of  calendering  in  the 
paper  machine  may  be  varied  considerably.  So-called  antique  and 
wove  papers  are  produced  by  very  superficial  calendering  on  the 
machine.  A  smooth  paper  with  considerable  polish  may  be  produced 
by  using  two  or  three  calendars  on  the  paper  machines. 

If  a  particularly  high  finish  is  desired,  the  paper  is  run  through  the 
supercalendering  machines.  These  consist  of  a  series  of  alternating 
pressed  paper  or  cotton  and  hollow  iron  rolls  placed  one  over  the 
other.  The  sheet  is  moistened  with  water  or  with  a  sizing  solution 
containing  gelatine  and  alimi  before  it  is  passed  through  the  cal- 
endering machine. 


For  printing  illustrations  it  is  generally  necessary  to  procure 
paper  with  a  surface  still  more  smooth  than  can  be  produced  by  cal- 
endering. In  such  cases  the  paper  is  coated  with  a  solution  usually 
composed  of  clay  mixed  with  casein  to  cause  it  to  adhere  to  the  paper. 
Starch  sometimes  is  used  in  place  of  casein  and  blanc  fixe  (barium 
sulphate) ;  satin  white  or  other  materials  may  be  used  in  place  of  clay. 

The  coating  machines  are  of  various  types.  Sometimes  it  is 
desired  to  coat  only  one  side  of  the  paper.  The  sheet  then  is  passed 
over  a  roller,  where  its  transverse  side  comes  into  contact  with  a  rotary 
brush,  which  applies  the  coating  material.  The  material  is  then 
distributed  over  the  surface  thoroughly  by  several  brushes  that 
move  back  and  forth  against  the  sheet  on  its  way  up  through  the 
machine.  It  then  passes  over  a  roller  at  the  top  of  the  machine  and 
is  caught  up  on  its  uncoated  side  on  a  wooden  bar,  carried  at  either 
end  by  traveling  chains,  which  carry  the  bar  supporting  the  sheet  to 
a  point  near  the  ceiling  of  the  room.  At  this  point  the  bar  is  sus- 
pended on  two  other  traveling  chains,  moving  at  a  much  lower  rate 
of  speed  than  the  rate  maintained  in  the  coating  machine  proper. 
As  a  result  the  sheet  sags  down  nearly  to  the  floor  between  each  sup- 
porting bar,  and  in  this  festoonlike  arrangement  is  transported  slowly 
for  a  hundred  feet  or  more.  This  allows  several  hundred  feet  of 
paper  to  be  exposed  to  the  drying  effect  of  the  air  without  necessi- 
tating that  the  coated  side  be  touched  until  it  is  dry  enough  to  be 
handled.  It  is  then  rolled  up.  It  may  be  run  back  through  the 
coating  machine  to  coat  the  transverse  side  or  it  may  be  sold  coated 
on  one  side  only.  Another  type  of  machine  makes  possible  the  coat- 
ing of  both  sides  of  the  paper  in  one  operation.  The  paper  is  passed 
up  between  two  rollers,  above  which  the  coating  material  is  applied. 
It  is  brushed  on  both  sides  to  distribute  the  material  evenly  and 
then  is  carried  on  a  blast  of  air  for  100  feet  or  more  until  the  lower 
side  has  dried  sufficiently  to  allow  the  sheet  being  hung  up  on  bars 
as  described  above. 

After  the  coating  material  has  been  applied  and  dried  the  sheet  is 
run  through  calendering  machines  to  produce  the  desired  finish. 

Section  4.  BOOK-PAPER  JOBBERS. 

Book  paper  is  handled  by  a  large  number  of  jobbers  throughout 
the  country.  All  the  larger  cities  have  one  or  more  jobbers,  some  of 
whom  have  branch  houses  at  various  points.  Most  of  these  jobbers 
carry  various  other  lines  of  paper  besides  book  paper,  such  as  bond, 
writmg,  news  print,  wrapping,  etc.  Practically  all  the  book  paper 
handled  by  jobbers  is  bought  and  sold  by  them  on  their  own  account, 
very  little  being  handled  on  a  commission  basis. 

Some  of  the  more  important  jobbers  handling  book  paper,  who 
furnished  detailed  information  regarding  prices  and  profits,  and  the 
location  of  their  main  offices,  are — 

Bermingham  &  Seaman  Co.,  New  York  and  Chicago, 
Bulkley,  Dunton  &  Co.,  New  York. 
W.  F.  Etherington  &  Co.,  New  York. 
Perkins-Goodwin  Co.,  New  York. 
Perkins  &  Squier  Co.,  New  York. 
Arnold-Roberts  Co.,  Boston. 
Carter,  Rice  &  Co..  Boston. 
Garrett-Buchanan  Co.,  Philadelphia. 
Megargee-Hare  Paper  Co.,  Philadelphia. 


i 


32 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


33 


!• 


AUing  &  Cory  Co.,  Rochester,  N.  Y. 

The  Central  Ohio  Paper  Co.,  Columbus,  Ohio. 

Union  Paper  &  Twine  Co.,  Detroit. 

Beecher,  Peck  &  Lewis.  Detroit. 

J.  W.  Butler  Paper  Co.,  Chicago. 

Chicago  Paper  Co.,  Chicago. 

The  Paper  Mills  Co.,  Chicago. 

Bradner,  Smith  &  Co.,  Chicago. 

Whitaker  Paper  Co.,  Cincinnati. 

Louisville  Paper  Co.,  Louisville. 

Graham  Paper  Co.,  St.  Louis. 

A  much  larger  percentage  of  book  paper  is  distributed  through 
jobbers  than  is  the  case  with  news-print  paper.  In  fact,  some  of  the 
yestem  manufacturers  sell  practically  all  their  production  through 
jobbers,  and  the  eastern  manufacturers  also  dispose  of  a  large  part 
of  their  open-market  business  in  this  way. 

Book  paper  purchased  in  the  open  market  is  bought  largely  through 
jobbers  smce  they  keep  a  great  variety  of  grades,  sizes,  colors,  etc., 
on  hand,  and  in  the  large  centers  also  mamtain  a  deUvery  service. 
In  some  cases,  jobbers  carry  hundreds  of  different  items  in  stock,  or 
can  have  them  quickly  dehvered  from  the  mills. 

Most  of  the  jobbers  issue  price  lists  from  time  to  time.  During 
1916,  when  prices  were  rising,  these  hsts  were  issued  at  frequent 
intervals. 

The  price  lists  issued  by  jobbers  are  of  two  kinds,  one  known  as  the 
/  net  hst,  which  is  most  generally  used,  and  the  other  known  as  the  lonc^ 
list,  which  IS  in  use  in  Detroit  and  to  a  greater  or  less  extent  in 
Cleveland,  Buffalo,  Cincinnati,  and  Louisviflc.  The  neLlist  gives  the 
cash  price  less  the  usual  discounts,  while  the  long  hst  is  25  per  cent 
higher  than  the  net  hst.  The  purpose  of  the  long  hst  is  primarily  to 
protect  the  printer.  In  cities  where  the  long  hst  is  effective  a  con- 
sumer of  printing  paper  other  than  a  printer  or  publisher  can  not  buy 
directly  from  the  jobber  except  at  the  long-hst  price,  while  a  printer 
or  publisher  gets  a  20  per  cent  discount. 

Carload  sales  by  jobbers  are  practically  all  shipped  direct  from  the 
mill  to  the  customer.  Quantities  less  than  a  carload  but  more  than 
1  ton  may  be  shipped  either  from  the  mill  or  dehvered  from  the 
jobber's  warehouse.  Less  than  ton  lots  are  nearly  all  dehvered  from 
the  jobber's  warehouse.  This  usually  results  in  a  saving  in  freight 
to  the  buyer,  since  the  jobber  gets  a  carload  rate  on  the  paper  from 
the  mill  to  his  warehouse.  However,  the  expense  of  rehandlincr 
must  then  be  taken  into  consideration.  '^ 

Many  pubhshers  state  that  while  the  paper  bought  through  a  jobber 
may  cost  more  than  if  bought  direct,  they  consider  that  the  conven- 
ience of  having  the  jobber  reheve  them  of  the  trouble  of  making  the 
order  and  attending  to  the  details  of  the  transaction  is  worth  the  in- 
creased price. 

Exclusive  agencies.— A  number  of  the  more  important  jobbers  have 
the  exclusive  agency  in  their  localities  for  one  or  more  manufac- 
tiirers,  but  this  does  not  prevent  them  from  competing  in  localities 
where  there  is  no  representative.  The  J.  W.  Butler  Paper  Co.  has 
the  exclusive  agency  for  the  sale  of  S.  D.  Warren  &  Co.'s  paper  in 
western  territory.  The  sales  of  paper  by  the  West  Virginia  Pulp  & 
Paper  Co.  for  dehvery  in  locahties  other  than  New  York  City  and 
Chicago  are  made  chiefly  through  the  following  ^jobbers :  Allmg  & 
Cory  Co.,  Kochester,  N.  Y.;  R.  P.  Andrews  Paper  Co.,  Washington 


D.  C;  Arnold-Roberts  Co.,  Boston,  Mass.;  Carpenter  Paper  Co., 
Omaha,  Nebr.;  E.  A.  Bouer;  Milwaukee,  Wis.;  Chatfield  &  Woods  Co. 
Cincinnati,  Ohio;  and  Graham  Paper  Co.,  St.  Louis,  Mo.  The  West 
Virginia  Pulp  &  Paper  Co.  will  sell  in  the  territory  covered  by  each 
jobber  to  such  jobber  only.  Sales  of  the  Geo.  W.  Wheelwright  Paper 
Co.  in  the  Chicago  territory  are  made  entirely  through  Bradner, 
Smith  &  Co. 

Jobbers'  dssodaiions. — In  many  of  the  large  cities  the  jobbers 
maintain  local  trade  associations.  There  are  other  associations 
covering  various  sections  of  the  country  and  also  a  national  associa- 
tion covering  the  whole  country.  Only  jobbers  who  are  members  of 
local  associations  can  belong  to  the  national  association.  The  names 
of  these  associations  and  the  location  of  their  secretaries  are  as 
follows : 

National  Paper  Trade  Association,  New  York  City. 

New  England  Paper  Jobbers'  Association,  Boston,  Mass. 

Empire  State  Paper  Association,  Rochester,  N.  Y. 

Baltimore  and  Southern  Paper  Trade  Association,  Baltimore,  Md. 

Southern  Paper  Dealers'  Association,  Memphis,  Tenn. 

Central  States  Paper  Dealers'  Association,  Detroit,  Mich. 

Western  Paper  Dealers'  Association,  Chicago,  111. 

Northwestern  Paper  Trade  Association,  Minneapolis,  Minn. 

Boston  Paper  Trade  Association,  Boston,  Mass. 

Paper  Trade  Association  of  New  York  City,  New  York. 

Paper  Trade  Association  of  Philadelphia,  Philadelphia,  Pa. 

The  National  Paper  Trade  Association  has  adopted  on  book-paper 
sales  the  trade  customs  which  were  drawn  up  by  the  book-paper 
manufacturers.     For  a  copy  of  these  trade  customs  see  Exhibit  7. 

Section  6.  IMPOIITS  AND  EXPORTS  OF  BOOK  PAPER  AND  CHEMICAL 

PULP. 

Practically  all  of  the  book  paper  consumed  in  the  United  States  is 

E reduced  by  domestic  manufacturers.  Imports  are  almost  ncgligi- 
le.  Large  quantities  of  chemical  pulp  used  in  making  paper,  how- 
ever, are  inaported  from  Canada,  Scandinavia,  and  other  foreign 
countries.  War  conditions  have  interfered  somewhat  with  such 
imports  from  Europe  during  the  last  two  years. 

The  domestic  production  of  book  paper  is  normally  in  excess  of 
domestic  consumption,  so  that  considerable  quantities  are  exported. 
These  exports  increased  rapidly  in  1916  at  the  same  time  that 
domestic  consumption  was  increasing.  Many  markets  formerly  sup- 
plied by  European  manufacturers  were  forced  to  depend  upon  the 
American  manufacturers  for  their  supplies. 

Imports  of  book  paper. — The  principal  countries  exporting  book 
paper  to  the  United  States  in  normal  times  were  Germany,  Nether- 
lands, Norway,  England,  and  Scotland.  Since  the  beginning  of  the 
European  war  imports  from  Germany  have  ceased,  and  during  the 
fiscal  year  1917  no  imports  were  received  from  the  Netherlands. 

Table  4  below  shows  for  the  fiscal  years  ending  June  30,  1912  to 
1917,  the  imports  by  principal  countries  into  the  United  States  of 
printing  paper  for  bool^  and  newspapers,  valued  in  excess  of  2^  cents 
perpoimd  prior  to  September  8,  1916,  and  in  excess  of  5  cents  per 
pound  since  that  date.  The  bulk  of  the  paper  included  in  this  cias- 
sification  is  book  paper. 

12159°— S.  Doc.  79, 65-1 3 


mmmt 


34 


BOOK-PAPER  INDUSTRY. 


Table  4. — Imports  into  the  United  States  of  printing  paper  for  hoois  and  newspapers, 
valued  in  ercess  of  2\  cents  ^  per  pound,  by  fiscal  years  ending  June  30,  1912-1917. 


[Net  tons  of  2, 

000  pounds.] 

Country. 

1912 

1913 

1914 

1915 

1916 

1917 

Germanv           

455 
556 
517 
962 
445 

236 
803 
462 
945 
723 

690 
687 
315 
782 
553 

73 
733 

2.50 
815 
397 

Netherlands 

135 
11 

484 
81 

Norway 

112 

England  and  Scotland 

64 

Other  countries 

221 

Total 

2,935 

3,169 

3,027 

2,268 

711 

397 

1  Since  Sept.  8,  1916,  5  cents  per  pound. 

As  the  table  shows,  the  imports  have  declined  during  the  period 
from  3,169  tons  in  the  fiscal  year  ending  June  30,  1913,  to  2,268  tons 
in  1915,  711  tons  in  1916,  and  397  tons  in  1917.  Of  the  397  tons 
Canada  furnished  107  tons. 

Imports  of  chemical  wood  pulp. — The  principal  countries  exporting 
chemical  piilp  to  the  United  States  have  been  Germany,  Norwav, 
Sweden,  and  Canada.  Imports  from  other  countries  are  small. 
Sweden  and  Canada  have  furnished  more  than  half  of  the  unbleached 
pulp  and  Norway  more  than  half  of  the  bleached  pulp,  except  in 
1915  when  the  imports  from  that  country  were  a  little  less  than 
one-half. 

Unbleached  chemical  wood  pulp  imported  into  the  United  States 
includes  easy  bleaching  sulphite  and  unbleached  sulphate,  and 
bleached  chemical  wood  pulp  includes  both  sulphite  and  sulphate. 
Import  statistics  since  July  1,  1916,  separate  sulphite  from  sulphate 
and  these  figures  show  that  nearly  27  per  cent  of  the  unbleached  and 
more  than  9  per  cent  of  the  bleached  pulp  was  sulphate.  Table  5 
below  shows  tne  imports  of  chemical  wood  pulp  by  fiscal  years  end- 
ing June  30,  1912-1917  and  by  months  ana  six-month  periods  1915 
to  June,  1917. 


Table  5. — 


Imports  of  chemical  wood  pulp  by  principal  countries,  fiscal  years  ending 
June  30,  1912-1917,  and  by  months,  January,  1915- June,  1917. 

[Net  tons  of  2,000  pounds.] 


Country. 


UNBLEACHED. 

Germany 

Norway 

Sweden ^ 

Canada 

other 

Total 

BLEACHED. 

Germany 

Norway 

Sweden 

Canada 

other 

Total 

Total  unbleached  and  bleached 


1912 


55,829 
31,774 
95,350 
38,159 
17.228 


238,340 


17,300 

41,798 

11,563 

7,703 

2,123 


80,537 


318,877 


1913 


59,204 
48,558 
126,353 
50,559 
14,553 


299,287 


16,361 

45,543 

12,548 

5,683 

1,756 


81,891 


391,178 


1914 


55,844 

43,970 

117,914 

79,327 

5,908 


302,963 


18,638 

46,292 

14,165 

6,630 

3,192 


1915 


24,490 

46,078 

149,633 

109,160 

6,767 


336, 128 


17.070 
54,389 
25,304 
12,915 
2,944 


88,917   112,622 


391,880   448,750 


1916 


118 

17,843 

101,512 

176, 163 

1,032 


296,668 


1 

40,019 

11,101 

11.109 

221 


62,451 


359, 119 


1917 


12,700 

208,935 

200,329 

5,429 


427,393 


25,123 

18,001 
10,373 


53,497 


480,890 


BOOK-PAPER  INDUSTRY. 


35 


Table  5.— Imports  of  chemical  wood  pulp  by  principal  countries,  fiscal  years  ending 
June  SO,  1912-1917,  and  by  months,  January,  1915- June,  J9i 7— Continued. 


Months. 


1915 


Un- 
bleached, 


L2,424 
32,789 
26,657 
15,402 
14,599 
18,204 
21,273 


January 

February '  ] . ' 

March..." ['] 

April 

May ] 

June 

July .....: 

August ;       2S',  283 

September 24  541 

October '"J      28^  692 

^  ovember ;      29, 355 

December |      29, 478 

First  6  months 

Second  6  months 


Total  for  year . 


160,075 
161,622 


Bleached. 


8,208 
7,615 
9,410 
3,067 
5,497 
5,658 
5,316 
6,158 
6.215 
4,086 
4,655 
6,739 


1916 


Un- 
bleached. 


39,455 
33, 169 


321,697 


72,624 


28,090 
23,227 
18,515 
26,660 
19.472 
19,002 
29,331 
41,343 
24,721 
34,290 
31,316 
72,258 


134,966 
233,259 


368.225 


Bleached. 


4,200 
8,745 
3,642 
6,352 
5,181 
1,160 
4,050 
3,960 
3,896 
3,706 
2,099 
5,951 


1917 


Un- 
bleached. 


28,450 
31,836 
27,035 
24,358 
43.4.54 
39,003 


Bleached. 


10.033 
4,286 
2,1.50 
1,590 
9,830 
1,947 


29,280 
23,662 


52,942 


194.136 


29,836 


The  table  shows  that  the  imports  of  both  classes  of  pulp  increased 
from  318,877  t(jis  in  the  fiscal  year  1912  to  448,750  tons  in  1915  and 
fell  to  359,119  tons  in  1916.  For  the  fiscal  year  1917  the  total  im- 
ports were  480,890  net  tons,  or  32,140  net  tons  more  than  for  any  year 
shown  in  the  table.  Imports  bv  six-montli  periods  for  bleached  pulp 
fell  from  39,455  in  the  first  hall  of  the  calendar  year  1915  to  23,662 
in  the  last  half  of  1916  and  then  increased  to  29,836  tons  in  the  first 
SIX  months  of  1917.  Imports  of  imbleached  pulp  were  only  134,966 
tons  m  the  first  half  of  1916,  as  against  233,259  tons  in  the  second  half 
of  the  same  year.  The  imports  were  largest  in  December,  1916,  the 
imports  of  bleached  and  unbleached  pulp  being  78,209  tons,  or  nearly 
four  times  the  imports  in  June,  1916. 

In  Europe  the  sulphate  process  has  almost  entirely  displaced  the 
soda  process  for  the  alkaline  digestion  of  coniferous  woods,  which 
accounts  for  the  absence  of  imports  of  soda  pulp. 

Exports  of  wood  pulp.— Exports  of  domestic  wood  pulp  for  the  fiscal 
years  endii.g  June  30,  1912-1917  are  shown  in  Table  6  below. 

Table  6.— Exports  of  domestic  wood  pulp,  fiscal  years  ending  June  SO,  1912-1917. 

[Net  tons  of  2,000  pounds.] 


Country. 

1912 

1913 

1914 

1915 

1916 

1917 

England 

875 
3,311 
2,150 
1,957 
33 
44 
1,574 

1,207 

2,898 

3,380 

10, 173 

868 

1,313 
2,122 
2,621 
3,578 
951 
54 
2,842 

1,008 
171 
309 
3,054 
1,352 
2,249 
1,276 

2,934 

Belgium ]  ] . . 

8,092 

France 

Canada 

1,244 
12,883 

4,963 
15,529 

2,760 

655 

Argentina 

13,486 

Japan 

3,575 

other 

2,212 

1,197 

2,177 

Total 

9,944 

20,738 

13,481 

9,419 

40,313 

29,182 

Exports  of  domestic  pulp  have  fluctuated  widely  from  year  to  year 
ranging  from  9,419  tons  in  1915  to  40,313  tons  in  1916.  The  exports 
for  the  fiscal  year  1917  are  only  72  per  cent  of  those  for  the  preceding 
year.    Japan,  which  ordinarily  imports  little  pulp  from  the  United 


1 


36 


BOOK-PAPEE  INDUSTRY, 


BOOK-PAPER  INDUSTRY. 


37 


States,  took  15,529  tons  in  1916,  and  Canada  took  more  than  10,000 
tons  in  1913,  1916,  and  1917. 

ExpoHs  of  hook  paper.— The  principal  countries  to  which  book  paper 
is  exported  are  Argentina,  Austraha,  Cuba,  England  and  Scotland, 
Brazil,  Mexico,  Canada,  Japan,  and  Chile.  Table  7  shows  the  tons 
of  printing  paper  other  than  news  print  exported  from  the  United 
States  to  specified  countries  and  the  total  for  the  fiscal  years  ending 
June  30,  1912-1917.     The  bulk  of  this  paper  is  book  paper. 

Table  7  —Exports  of  domestic  printing  paper  other  than  news  print,  fiscal  years  ending 

June  SOy  1912-1917. 

[Net  tons  of  2,000  pounds.] 


1912 


Argentina 

Australia 

Cuba 

England  and  Scotland . 

Brazil 

Mexico 

Canada 

Japan 

Chile 

other  countries 


56 
946 

2,164 

1,709 

56 

351 

4,022 
671 
388 

1,744 


Total 12,107 


Period  of  6  months  ending- 
June  30 

December  31 


1913 


104 

1,380 

2,888 

1,711 

20 

406 
5,200 

399 

524 
1,685 


14,317 


1914 


178 

1,414 

2,552 

2,008 

23 

261 
5,190 

428 

457 
1,795 


1915 


14,301 


Total  for  year. 


786 

2,114 

3,143 

2,247 

340 

448 

3,021 

352 

513 

2,668 


15,632 


7,884 
14,445 


22,329 


1916 


5,812 
3,105 
5,321 
3,929 
2,091 
2,098 
3,054 
2,718 
2,192 
6,417 


1917 


36,737 


22,293 
39,780 


January.. 
February. 

March 

April 

May. 


June 

July 

August 

September . 

October 

November . 
December. 


897 
992 
1,184 
1,274 
1,480 
2,057 
2,115 
1,774 
2,264 
1,773 
2,216 
4,303 


62,073 


10,109 
8,525 
7,320 
4,205 
6,727 
3,773 
4,309 
1,450 
3,754 

14,429 


64,601 


24,822 


2,655 
3,304 
3,642 
3,580 
4,463 
4,649 
6,024 
7,636 
5,421 
7,166 
6,986 
6,547 


5,654 
2,861 
3,755 
3,898 
4,062 
4,592 


Exports  during  the  first  four  fiscal  years  ending  June  30,  1912-1915 
increased  only  3,525  tons  as  compared  with  an  increase  of  21,105 
tons  in  1916  over  1915  and  27,864  tons  in  1917  over  1916.  The 
exports  for  the  calendar  year  1916  increased  39,744  tons  over  1915, 
or  about  178  per  cent.  Tiie  principal  coim tries  consuming  this  paper 
are  shown  in  the  first  column  of  the  table.  Argentina  leads  with 
more  than  10,000  tons  in  1917.  France  and  Greece,  which  normally 
import  none,  each  took  more  than  1,000  tons  in  1916.  Exports  by 
months  increased  steadily  from  894  tons  in  January,  1915,  to  7,636 
tons  in  August,  1916.  The  smallest  exports  during  any  month  since 
that  date  were  for  February,  1917,  with  2,861  tons. 

Section  6.  ADVERTISING  AND  CIRCULATION  STATISTICS. 

The  domestic  consumption  of  book  paper  in  1916  as  compared  with 
1915  is  shown  by  increases  in  the  number  of  copies  and  the  number 
of  pages  of  advertising  matter  printed  by  the  principal  periodicals  and 
magazines.     The  possibility  of  variations  in  the  weight  of  paper  used 


and  in  the  size  of  page  was  not  considered.  Such  data  were 
obtained  by  months  for  the  period  January,  1915,  to  December,  1916, 
from  a  number  of  publishers  of  periodicals  in  New  York,  Philadelphia, 
Boston,  Cleveland,  and  Chicago.  Table  8  below  shows  the  total 
increase  and  percentage  of  increase,  by  cities,  of  pages  printed,  adver- 
tising pages  printed,  copies  printed,  average  number  of  pages  per 
issue  and  average  number  of  advertising  pages  per  issue  for  129 
important  periodicals. 


Table  8. 


-Increase  in  total  pages,  advertising  pages,  and  copies  printed,  and  average  in- 
crease per  issue  of  certain  periodicals,  by  cities^  1916  over  1915. 


Num- 
ber of 
period- 
icals. 

Increase,  all  issues,  1916  over  1915. 

Average  increase  per 
issue. 

City. 

Total  pages. 

Advertising  pages. 

Copies  printed. 

Total  pages 
per  issue. 

Advertising 

pages  per 

issue. 

Number. 

Per 
cent. 

Number. 

Per 
cent. 

Number. 

Per 
cent. 

Num- 
ber. 

Per 
cent. 

Num- 
ber. 

Per 
cent. 

New  York 

Philadelphia.. 

Boston 

Cleveland 

Chicago 

69 
18 
13 
8 
21 

3,569,825,411 

2,683,239,033 

25,616,335 

21,409,110 

702,157,941 

15 

26 

3 

4 

12 

i 

2,749,554,488         26 

1,743,809,830        42 

14,234,532          5 

42,192,730,        25 

515,557,946|        25 

15,760,912 

8,044,107 

131,830 

221,085 

2,358,802 

8 
6 

'\ 

4 

9.6 

18.5 

.1 

6.1 

4.7 

9.1 

13.1 

.2 

6.3 

3.9 

9.5 

12.7 

.5 

6.5 

5.9 

18.2 
27.1 
2.2 
16.7 
13.6 

Total  and 
average. 

12S 

17,002,247,830 

17 

5,065,349,526        29 

26,353,076 

6 

8.6 

7.9       &3 

18.0 

• 

1  Decrease. 


« Decrease  of  less  than  1  per  cent. 


Of  the  129  periodicals  included  in  the  table  72  are  monthly,  50 
are  weekly,  1  five  times  a  week,  and  2  each  are  semimonthly,  bi- 
monthly, and  quarterly.  Four  of  the  cities  show  an  increase  in  the 
total  number  ol  copies  printed,  while  the  13  in  Boston  had  a  slight 
loss.  The  increase  in  advertising  was  the  controlling  factor  in  the 
increased  demand  by  pubhshers.  The  total  number  of  advertising 
pages  increased  more  than  5,000,000,000,  or  29  per  cent  for  the 
129  periodicals.  The  increase  for  Boston  was  a  Uttle  over  14,000,000, 
or  5  per  cent;  while  that  for  Philadelphia  was  1,750,000,000,  or  42 
per  cent.  The  advertising  pages  for  the  69  New  York  pubhcations 
increased  2,750,000,000,  or  26  per  cent,  in  1916  over  1915.  The 
eight  publications  in  Cleveland  showed  an  increase  of  more  than 
42,000,000  pages  in  advertising,  or  25  per  cent,  as  against  an  increase 
of  only  21,000,000  in  total  pages  printed,  indicating  a  decided  reduc- 
tion in  the  volume  of  reading  matter. 

The  average  number  of  pages  of  reading  matter  per  issue  increased 
5.8  pages  for  Philadelphia  and  only  one-tenth  ol  a  pa^e  for  New 
York,  while  in  the  other  cities  advertising  more  than  absorbed  all 
the  gain  in  the  average  mmiber  of  pages  per  issue.  For  the  129 
periodicals  combined  reading  matter  increased  only  three-tenths  of 

a  page  per  issue. 

The  increase  in  advertising  pages  per  issue  in  1916  over  1915  is 
indicated  by  the  percentage  figures  in  the  last  column  of  the  table, 
which  range  from  2.2  per  cent  for  the  13  Boston  periodicals  to  27.1 
per  cent  for  the  18  Philadelphia  periodicals,  with  an  average  of  18 
per  cent  for  the  129  periodicals  combined. 


38 


BOOK-PAPEB  INDUSTRY. 


-•  i 


.■•  J 
1 


Section  7.  STTMMAIIY  OF  SUPPLY  AND  DEMAND  FACTORS. 

The  statistics  given  in  the  preceding  sections  show  the  changes 
in  the  supply  and  demand  for  book  paper  in  1916  and  1917  as  com- 
pared with  1915.  The  domestic  demand  and  supply  is  shown  by  the 
mcreases  in  production  and  shipments,  the  decreases  in  stocks  on 
hand,  and  the  increases  in  the  advertising  pages  and  total  printed 
pages  of  129  leading  pubhcations,  which  were  as  follows: 

Production  of  principal  mills  increased  in  calendar  year  1916  over  1915  about  20 
per  cent. 

Production  of  principal  mills  for  the  first  8  months  of  1917  was  at  a  slightlv  lower 
rate  than  for  1916. 

Shipments  of  principal  mills  increased  in  calendar  year  1916  over  1915  about  22 
per  cent. 

Shipments  of  principal  mills  for  the  first  8  months  of  1917  were  at  a  somewhat 
lower  rate  than  in  1916. 

Stocks  on  hand  of  principal  mills  decreased  in  calendar  year  1916  under  1915  about 
50  per  cent. 

Stocks  on  hand  at  the  end  of  the  first  8  months  of  1917  were  considerably  lart^er 
than  at  the  end  of  1916. 

Advertising  pages  of  129  leading  publications  increased  in  calendar  year  1916  over 
1915  29  per  cent. 

Total  pages  printed  by  129  leading  publications  increased  in  calendar  year  1916 
over  1915  17  per  cent. 

The  situation  regarding  the  foreign  demand  and  supply  of  book 
paper  is  shown  by  the  increases  in  exports  and  the  decreases  in 
miports,  which  were  as  follows: 

Exports  increased  in  the  fiscal  year  1916  over  1915  about  135  per  cent. 
Exports  increased  in  the  fiscal  year  1917  over  1916  about  76  per  cent. 
Imports  decreased  in  the  fiscal  year  1916  over  1915  about  69  per  cent. 
Imports  decreased  in  the  fiscal  year  1917  over  1916  about  44  per  cent. 

The  business  prosperity  in  the  United  States  in  1916  stimulated 
advertising  and  increased  the  demand  for  book  paper,  especially 
by  publishers  of  magazines  and  periodicals.  The  demand  for  book 
paper  for  commercial  purposes  also  increased.  The  unusual  condi- 
tions throughout  the  world  brought  about  by  the  European  war  caused 
an  increase  in  the  demand  of  foreign  buyers.  Production  abroad 
was  curtailed,  and  certain  countries  formerly  suppUed  by  Europe  were 
obhged  to  obtain  their  supplies  from  the  United  States.  This 
caused  a  large  increase  in  exports. 

During  1916  the  book-paper  mills  were  run  at  high  speed,  some  of 
them  exceeding  their  rated  capacity,  but  although  production  in- 
creased almost  20  per  cent,  this  was  not  sufficient  to  take  care  of  the 
demands  of  both  domestic  and  foreign  buyers,  so  that  stocks  declined 
about  50  per  cent.  The  rising  prices  and  declining  stocks  caused  a 
panic  among  buyers,  which  resulted  in  considerable  hoarding  of 
paper. 


CHAPTER  II. 


PRICES  OF  BOOK  PAPER,  AND  JOBBERS'  PROFITS. 

Section  1.  INTRODUCTION. 

The  commission  secm-ed  from  manufacturers,  jobbers,  and  pub- 
hshers  the  prices  of  machine  finish,  sized  and  supercalendered,  and 
coated  book  paper  for  1916  and  one  or  more  prior  years.  It  was  not 
feasible  to  obtain  the  prices  of  other  special  grades  of  book  paper, 
which  are  sold  in  smaller  quantities.^ 

The  prices  paid  and  received  by  jobbers  were  secured  on  sales  for 
direct  shipment  from  the  mill  to  the  consumer,  so  that  the  jobbers' 
gross  margins  of  profit  could  be  ascertained.  It  was  not  possible 
to  obtain  the  margins  of  profit  on  sales  from  the  jobbers'  stocks, 
since  the  cost  and  seUing  prices  for  the  same  lots  of  paper  could  not 
be  ascertained. 

Sources  of  information. — Prices  received  by  manufacturers  were 
obtained  from  23  companies,  whose  mills  are  located  in  the  territory 
from  Maine  to  Virginia  and  from  Pennsylvania  to  Wisconsin.  Prices 
paid  and  received  by  jobbers  were  secured  from  31  concerns  located 
m  Boston,  New  York,  Philadelphia;  Baltimore,  Rochester,  Buffalo, 
Pittsburgh,  Cleveland,  Columous,  Detroit,  Chicago,  Cincinnati, 
Louisville,  and  St.  Louis.  Prices  paid  by  pubHshers  were  obtained 
from  more  than  100  leading  publishers,  most  of  whom  are  located  in 
Boston,  New  York,  PhiladSphia,  Baltimore,  Cleveland,  and  Chicago. 

Principal  uses. — ^Machine  finish  paper  is  used  largely  by  the  pub- 
Ushers  of  books  and  for  printing  catalogues,  etc.  A  large  part  of 
the  sized  and  supercalendered  paper  is  used  by  pubUshers  of  illus- 
trated magazines.  Coated  paper  is  used  chiefly  for  high-grade 
illustration  and  hthographic  work.  Some  of  the  paper  of  each 
grade  is  also  used  for  miscellaneous  purposes.     (See  p.  20.) 

Variations  in  prices. — It  was  found  that  the  prices  of  book  paper 
varied  not  only  on  account  of  the  difference  m  grade  and  fimsh, 
but  also  for  a  number  of  other  reasons. 

Prices  on  contracts  are  usually  lower  than  prices  on  open-market 
sales.  Large  orders  are  generally  sold  at  a  lower  price  than  small 
orders.  Special  orders  that  have  to  be  made  according  to  specifica- 
tions furmshed  by  the  purchaser  are  charged  at  a  higner  rate  than 
for  similar  items  carried  in  stock.  Colored  paper  is  higher  in  price 
than  white  paper  and  paper  below  the  basis  weight  is  higher  in  price 
than  the  same  grade  at  or  above  the  basis  weight.^  Prices  also  vary 
according  to  the  method  of  packing  for  shipment.'  A  customer 
who  has  been  buying  from  the  same  manufacturer  or  jobber  for  a 
long  time  usually  gets  a  better  quotation  than  an  occasional  buyer. 
The  credit  risk  of  customers  is  also  reflected  in  the  price.     Lower 


»For  a  full  description  of  the  different  grades  of  book  paper,  see  pp.  19  to  20. 
»See  Exhibit  7  for  details  of  basis  weights  and  excess  charges  for  under  weights. 
•Seep.  123. 


39 


i 


40 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


41 


; 

4 


prices  are  charged  by  some  manufacturers  and  jobbers  to  publishers 
of  periodicals  than  to  pubUshers  of  books,  while  the  latter  have  been 
charged  lower  prices  than  consumers  of  paper  for  miscellaneous 
purposes.  These  differences  in  price  were  especially  pronounced 
m  1916.     (See  p.  58.) 

In  the  chief  consuming  territory  of  book  paper  freight  rates  do  not 
cause  much  variation  in  prices,  as  the  book-paper  mills  are  well  scat- 
tered, so  that  most  of  the  large  consumers  are  located  not  far  distant 
from  one  or  more  mills.  For  this  reason,  all  prices  given  in  this  chap- 
ter are  for  sales  to  customers  located  in  the  territory  north  of  and 
including  Virginia,  Kentucky,  and  Missouri,  and  east  of  and  includmg 
Missouri,  Iowa,  and  Minnesota. 

Method  of 'presenting  cZato.— The  prices  and  jobbers'  margins  are  pre- 
sented as  averages,  in  order  to  show  the  extent  of  the  increases. 

Prices  are  shown  on  white  book  paper  for  the  three  grades — ma- 
chine finish,  sized  and  supercalendered,  and  coated.  The  prices  m 
each  case  cover  all  varieties  within  each  grade  and  also  include  all 
kinds  of  packing.  , ,        ,  j 

Separate  tabulations  were  made  for  paper  sold  under  contract  and 

that  sold  in  the  open  market. 

Contract  prices  are  shown  for  contracts  made  dunng  the  penod 
1913  to  1916,^  inclusive,  and  are  given  separately  for  sales  of  manufac- 
turers and  sales  of  jobbers.  The  manufacturers'  contract  pnces  are 
given  separately  for  manufacturers  east  of  the  Pennsylvania-Ohio  Hue 
and  for  those  west  of  that  hne,  and  in  each  case  for  sales  to  pubUshers 
and  to  jobbers.  The  jobbers'  contract  sales  are  also  shown  separately 
for  eastern  and  western  jobbers. 

Open-market  prices  are  shown  for  1915,  1916,  and  the  first  quarter 
of  1917,  and  are  given  separately  for  the  sales  of  jobbers  and  the  pur- 
chases of  pubUshers  in  certain  cities. 

Jobbers^  gross  margins  are  shown  separately  for  contracts  and  for 

open-market  sales.  .  i       •       u     j- 

The  prices  shown  in  this  chapter  are  net  pnces,  that  is,  the  dis 
counts  and  commissions  have  been  subtracted  in  aU  cases.  All  prices 
are  for  deUvery  of  the  paper  at  the  customer's  sidewalk,  and  therefore 
mclude  freight  and  cartage.  In  the  territory  for  which  prices  are 
given  the  carload  freight  rate  averages  between  10  and  15  cents  per 
100  pounds  and  cartage  about  4  cents  per  100  pounds. 

Section  2.  CONTRACT  PBICES. 

A  smaller  proportion  of  book  paper  is  sold  imder  contract  than  is 
the  case  with  news-print  paper,  there  being  fewer  large  consumers. 
Some  of  the  manufacturers  of  book  paper  seU  none  of  their  output 
under  contract,  some  sell  only  a  small  proportion,  while  others  sell  90 
per  cent  or  more  in  this  way.  In  general,  compames  with  a  small 
production  sell  most  of  their  paper  in  the  open  market,  while  those 
with  a  large  production  sell  mostly  on  contract. 

A  larger  proportion  of  supercalendered  paper  is  disposed  of  under 
contract  than  any  other  grade,  and  a  smaller  proportion  of  coated. 
This  is  due  to  the  fact  that  supercalendered  is  used  in  large  quantities 
regularly  by  pubUshers  of  periodicals,  while  coated  is  used  m  small 
quantities  at  irregular  intervals  by  a  large  number  of  c 


consumers. 


»For  western  manulacturers  the  contract  prices  are  also  shown  for  the  first  quarter  of  1917. 


Terms  of  contracts. — Contracts  for  the  purchase  of  book  paper  pro- 
vide for  deUvery  to  the  purchaser  of  a  certain  tonnage  of  a  specified 
grade  of  paper  at  the  price,  on  the  terms,  and  for  the  period  stipulated 
in  the  agreement. 

The  tonnage  specifications  prior  to  1916  varied  considerably.  In 
some  cases  provision  was  made  for  the  entire  requirements  of  the 
purchasers  with  an  estimate  of  the  tonnage  required.  Sometimes  a 
maximum  and  minimum  tonnage  was  fixed.  In  some  contracts  a 
definite  tonnage  was  named,  but  with  a  leeway  of  a  certain  percent- 
age either  above  or  below  the  specified  tonnage.  Under  any  of  these 
provisions  great  Uberty  was  allowed  to  the  purchaser  as  to  how  much 
paper  he  would  take.  In  contrast  most  of  the  contracts  for  delivery 
of  paper  in  1917  fix  a  definite  noncumulative  tonnage  to  be  deUvered 
each  month. 

As  a  rule  the  contracts  cover  a  period  of  one  year,  although  many 
cover  shorter  periods,  and  a  few  run  for  two  or  three  years. 

Nearly  all  the  contracts  for  book  paper  provide  for  the  delivery 
of  the  paper  either  at  customer's  sidewalk  or  f.  o.  b.  cars  at  desti- 
nation. Manufacturers  and  jobbers  east  of  the  Pennsylvania-Ohio 
.line  usually  deliver  the  paper  at  the  sidewalk,  while  tnose  west  of 
this  line  usuaUy  deliver  f.  o.  b.  cars  at  destination  except  in  large 
cities.  Cartage  charges  from  cars  to  sidewalk  range  from  2^  to  5 
cents  per  100  pounds.  Where  the  cartage  charge  was  not  stated,  it 
was  estimated  at  4  cents  per  100  pounds. 

Discounts  ranging  from  1  per  cent  to  5  per  cent  are  given  on 
practically  aU  contracts,  the  prevailing  rate  of  discount  being  3 
per  cent  for  payment  in  30  days. 

A  large  quantity  of  book  paper  is  purchased  under  so-called  letter 
contracts  and  some  under  oral  agreements.  The  letter  contract 
is  in  the  form  of  a  letter  from  the  seller  to  the  purchaser,  naming 
the  price,  terms,  etc.  Upon  acceptance  by  the  purchaser  the  con- 
tract is  closed.  Most  of  the  oral  agreements  are  subject  to  change 
after  the  seller  has  notified  the  purchaser.  In  1916,  after  the  gen- 
eral advance  in  prices  began,  the  prices  on  many  of  these  oral  agree- 
ments were  advanced  every  two  or  three  months. 

In  many  cases  formal  contracts  made  late  in  1916  stipulated  the 
tonnage,  terms,  period  of  contract,  etc.,  but  made  the  price  subject 
to  change  every  one,  two,  or  three  months.  The  purchaser  was  pro- 
tected as  to  his  supply  qf  paper  but  not  as  to  the  price. 

The  paper  furnished  under  recent  contracts  has  frequently  been 
a  lower  grade  than  that  formerly  furnished  under  the  same  speci- 
fications. In  some  cases  publisners  voluntarily  accepted  a  lower 
grade  than  they  had  been  getting. 

In  this  section  the  prices  have  been  tabulated  according  to  the 
date  of  making  the  contract,  and  not  the  period  covered.  For 
example,  contracts  made  in  the  second  half  of  1916  were  mostly  for 
delivery  of  paper  during  1917. 

Manufacturers^  prices. — ^The  following  table  shows  the  average 
net  prices  per  100  pounds  received  by  23  principal  manufacturers 
on  contracts  with  publishers  and  jobbers  for  delivery  of  white  book 
paper  at  purchaser's  sidewalk  during  the  period  1913  to  1916, 
inclusive. 


I 


42 


BOOK-PAPER   INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


43 


Table  9.— Average  net  prices  per  100  pounds  received  by  23  principal  manufacturers 
m  the  United  States  on  contracts  with  publishers  and  jobbers  for  delivery  of  white  book 
paper  at  purchasers'  sidewalk,  1918-1916.^ 


Publishers. 


Total. 


Machine  finish: 

1913 

1914 

1915 

1916(firsthalf) 

1916  (second  half) '". 

Supercalendered : 

1913 '      91,295 

1914 i      76,212 


Tons. 
26,772 
34,509 
27,738 
7,578 
29,727 


Per  100 
pounds. 


1915 

1916  (first  half)... 
1916  (second  half) 
Coated: 

1913 

1914 

1915 

1916  (first  half)... 
1916  (second  half) 


105,186 

34, 187 

119,397 

1,956 
1,381 
5,639 
1,854 
4,337 


$3.58 
3.58 
3.59 
4.31 
6.34 

3.60 
3.65 
3.58 
3.65 
5.87 

6.17 
5.53 

4.89 
5.16 
8.01 


Jobbers. 


Total. 


Tent. 

33,407 

59,791 

76,393 

22.090 

30,448 

24,645 
22,156 
32, 137 
12,112 
17,814 

11,231 
2,114 
5,034 
7,333 
5,785 


Per  100 
pounds. 


Publishers  and  job- 
bers combined 


Total. 


Per  100 
pounds. 


Tons. 

$3.75 

60,179 

$3.67 

3.67 

94,300 

3.64 

3.61 

104, 131 

3.60 

4.12 

29,668 

4.17 

6.97 

60,175 

6.66 

3.80 

115,940 

3.64 

3.73 

98,368 

3.67 

3.66 

137,323 

3.60 

4.92 

46,299 

3.99 

6.65 

137,211 

5.97 

5.28 

13, 187 

5.26 

4.92 

3,495 

5.16 

4.84 

10,073 

4.87 

5.69 

9,187 

5.58 

8.07 

10,122 

8.05 

1  This  table  includes  contract  sales  of  mills  east  of  the  Mississippi  River,  for  delivery  of  paper  in  the  ter- 
ritory north  of  and  mcluding  Virginia,  Kentucky,  and  Missouri,  and  east  of  and  includine  Missouri 
Iowa,  and  Mmnesota.  ^       ^owi^n, 

The  table  shows  that  the  average  prices  for  all  three  grades  on 
contracts  with  publishers  and  jobbers  combined  declined  during  the 
period  1913-1915,  inclusive.  On  machine-finish  paper  the  average 
price  decreased  from  $3.67  to  $3.60,  or  7  cents  per  100  pounds;  on 
supercalendered,  from  $3.64  to  $3.60,  or  4  cents  per  100  pounds; 
and  on  coated,  from  $5.26  to  $4.87,  or  39  cents  per  100  pounds.  The 
major  part  of  these  decreases  was  due  to  the  decline  in  prices  to  job- 
bers, which  was  14  cents  for  machine  finish,  14  cents  for  supercal- 
endered, and  44  cents  for  coated.  Prices  to  publishers  increased 
1  cent  per  100  pounds  for  machine  finish  and  decreased  2  cents  for 
supercalendered  and  28  cents  for  coated. 

Prices  advanced  in  every-  case  during  the  first  half  of  1916,  the 
extent  of  the  advance  bemg  dependent  upon  whether  the  major 
part  of  the  tonnage  was  contracted  for  during  the  first  quarter  or 
the  second  quarter  of  the  year.  The  increases  during  the  second  half 
of  1916  were  very  large  in  all  cases. 

The  publishers  paid  lower  prices  for  machine  finish  and  super- 
calendered  paper  than  the  jobbers.  The  least  differences  paid  by 
these  two  classes  of  customers  were  in  1915,  being  2  cents  per  100 
pounds  on  machine  finish  and  8  cents  on  supercalendered,  while  the 
greatest  differences  were  in  the  second  half  of  1916,  being  63  cents 
per  100  pounds  on  machine  finish  and  78  cents  on  supercalendered. 
On  coated  paper  lower  prices  were  paid  by  publishers  than  jobbers 
in  1913  and  the  second  half  of  1916,  while  lower  prices  were  paid  by 
jobbers  than  publishers  in  1914  and  1915. 

The  table  shows  that  a  larger  tonnage  of  supercalendered  paper 
was  sold  under  contract  to  publishers  and  jobbers  combined  than  of 
either  of  the  other  grades,  while  machine  finish  came  next.  The  ton- 
nage for  coated  was  much  less  than  that  for  either  of  the  otiier  grades. 


More  of  the  machine  finish  and  coated  paper  under  contract  was 
sold  to  jobbers  than  to  publishers,  but  more  than  three-fourths  of 
the  supercalendered  shown  in  the  table  was  sold  directly  to  pub- 
lishers during  each  of  the  years  1913-1916,  inclusive. 

The  average  contract  prices  of  supercalendered  paper  were  gener- 
ally only  a  few  cents  per  100  pounds  higher  than  those  of  machine 
finish  during  the  period  1913-1915,  inclusive,  while  in  the  second 
half  of  1916  they  were  decidedly  lower.  The  price  of  supercalen- 
dered is  ordinarily  quoted  at  about  25  cents  per  100  pounds  higher 
than  machine  finish.  The  chief  reason  for  the  level  of  the  average 
prices  on  these  two  grades  as  shown  in  the  table  is  that  most  of  the 
supercalendered  was  sold  to  publishers  of  periodicals,  in  many  cases 
under  contracts  for  large  tonnages,  and  as  shown  later  (see  p.  58) 
this  class  of  purchasers  was  able  to  make  contracts  at  lower  prices 
than  any  other  class,  especially  in  the  last  half  of  1916.  Another 
reason  for  the  comparatively  low  average  prices  of  supercalendered 
is  that  most  of  this  grade  oi  paper  is  made  by  a  few  manufacturers 
whose  costs  are  low. 

The  increases  in  the  average  contract  prices  of  the  23  manufac- 
turers in  the  second  half  of  1916  as  compared  with  1915  are  given  in 
the  tabulation  below  in  dollars  per  100  pounds  and  in  percentages: 


Increase,  second  half  of  1916  over  the  year  1915. 

Machine  finish. 

Supercalendered. 

Coated. 

Per  100 
pounds. 

Per  cent. 

Per  100 
poimds. 

Per  cent. 

Per  100 
pounds. 

Per  cent. 

Publishers 

$2.75 
3.36 
3.06 

77 
93 
85 

$2.29 
2.99 
2.37 

64 
82 
66 

$3.12 
3.23 
3.18 

64 

Jobbers '. 

67 

Publishers  and  jobbers  combined 

65 

The  tabulation  shows  that,  for  sales  to  publishers  and  jobbers 
combined,  the  greatest  increase  in  dollars  was  on  coated  paper,  while 
the  greatest  increase  in  percentages  was  on  machine  finish.  The 
lowest  increase  in  percentages  was  on  coated,  while  the  lowest  in- 
crease in  dollars  was  on  supercalendered. 

The  increases  to  jobbers  -both  in  dollars  and  per  cents  were  greater 
than  the  increases  to  publishers.  On  machine-finish  paper  the 
prices  increased  16  per  cent  more  to  jobbers  than  to  publishers; 
on  supercalendered,  18  per  cent  more;  and  on  coated,  3  per  cent 
more. 

The  following  table  shows  contract  prices  for  the  same  manufac- 
turers included  in  Table  9,  above,  but  separates  the  m mufrcturers 
east  of  the  Pennsylvania-Ohio  line  from  those  west  of  that  line. 


I 


t 


44 


41 


BOOK-PAPEB  INDUSTRY. 


^7i&SSB:£.T§BS^^^"''^^^'^°^^ 


Date  of  making  contract. 


Publishers. 


Total. 


EASTER.V  MAJfUFACTURERS. 


Machine  finish: 

1913 

1914 

1915 


Per  100 
pounds. 


Jobbers. 


Total. 


TOTU. 

20,207 
28,091 


1916 (first half).;::: i   VcS^ 

IQlfi  C5!APr.nH  horn      .9'*'^ 


1916  (second  halo -.:::: 27 -mi 

Supercalendered-  ^^,m^ 

1913 

1914 

1915 

1916  (first  half). 

1916  (second  half) 
Coated: 

1913 

1914 

1915 

1916  (first  half)... 

1916  (second  half) 


88,346 
73,202 

101,104 
23,848 

115,837 


WESTERN  MANUFACTURERS. 


Machine  finish: 

1913 

1914 

1915 

1916  (first  half) 

1916  (second  half) . 

1917  (first  quarter). 
Supercalendered- 

1913 

1914 

1915 

1916  (first  half) 

1916  (second  half) 

1917  (first  quarter). 
Coated: 

1913 

1914 

1915 

1916  (first  half). 

1916  (second  half) . . 

1917  (first  quarter) . 


1,576 
726 
4,364 
1,179 
4,237 


6,565 
6,418 
3,016 
653 
2,475 
1,280 

2,949 
3,010 
4,082 
10,339 
3,560 

380 
655 
1,275 
675 
100 


S3. 60 
3.59 
3.59 
4.34 
6.39 

3.50 
3.65 
3.59 
3.59 
5.87 

5.22 
5.67 
4.91 
6.07 
8.00 


3 
3 
3 
3 
5 
6. 

3. 
3. 
3. 
3. 
5. 
6. 

4. 
5. 
4. 
5. 

8. 


50 
.55 
59 
96 
75 
.88 

,67 
62 
33 
80 
84 
46 

95 
38 
83 
31 

77 


Tons. 
12,322 
33,882 
30,349 
6,670 
12,546 

17,063 
12,403 
17,079 
6,712 
12,366 

11,231 
607 
829 
283 
941 


21,085 
25,909 
46,044 
15,420 
17,902 
4,157 

7,582 
9,753 
15,058 
5,400 
5,448 
272 


PerlOO 
pounds. 


PubUshers  and  Job- 
bers combined. 


Total. 


1,507 
4,205 
7,050 
4,844 
847 


13.60 
3.58 
3.63 
4.18 
6.63 

3.85 
3.74 
3.66 
4.30 
6.20 

5.28 
4.96 
4.95 
6.00 
8.71 


3.84 
3.79 
3.60 
4.09 
7.21 
6.26 

3.70 
3.72 
3.65 
5.69 
7.68 
6.96 


4.91 
4.82 
5.67 
7.95 
8.98 


ToTU. 

32,529 
61,973 
55,071 
13,595 
39,798 

105,409 
85,605 

118,183 
30,560 

128,203 

12,807 
1,333 
5,193 
1,462 
6,178 


27,650 
32,327 
49,060 
16,073 
20,377 
5,437 

10,531 
12,763 
19,140 
15,7.39 
9,008 
1,268 

380 
2,162 
5,480 
7,725 
4,944 

847 


PerlOO 
pounds. 


S3. 60 
3.58 
3.61 
4.27 
6.46 

3.64 
3.66 
3.60 
3.75 
5.91 

5.27 
6.34 
4.92 
5.25 
8.13 


3.76 
3.74 
3.60 
4.08 
7.03 
6.41 

3.69 
3.69 
3.58 
4.45 
6.95 
6.56 

4.95 
5.05 
4.82 
5.64 
7.97 
8.98 


I  Mills  east  of  Pennsylvania^Ohio  line. 
'Mills  m  Ohio  Michigan,  and  Wisconsin. 

of  aS3°SdiS^  ^^S'lowta^yiSSsl^.""  ^^^"^'^  ^^^°^'  ^-^-^^^  -d  Missouri,  and  east 

Tliis  table  shows  that  eastern  manufacturers  seU  more  naner  imHpr 


BOOK-PAPER  INDUSTRY. 


45 


u  lf^%  "^creases  in  the  prices  given  in  the  above  table  for  the  second 
half  of  1916  over  1915  are  shown  below  in  dollars  and  in  percentages: 


Grade. 


Machine  finish: 

Eastern  manufacturers 

Western  manufacturers 

Eastern  and  western  combined 
Sui)ercalendered : 

Eastern  manufacturers 

Western  manufacturers 

Eastern  and  western  combined 
Coated: 

Eastern  manufacturers 

Western  manufacturers 

Eastern  and  western  combined, 


Increase  of  second  half  of  1916  over  the  year  1915. 


Publishers. 


PerlOO 
poimds. 


Per  cent. 


Jobbers. 


PerlOO 
pounds. 


S2.80 
2.16 
2.75 

2.28 
2.51 
2.29 

3.09 
3.94 
3.12 


Per  cent. 


78 
60 

77 

64 
75 
64 

63 
82 
64 


S3. 00 
3.61 
3.36 

2.54 
4.03 
2.99 

3.76 
3.13 
3.23 

83 

100 

93 


110 
82 

76 
65 
67 


Publishers  and  job- 
bers combined. 


PerlOO 
pounds. 


Per  cent. 


S2.85 
3.43 
3.06 

2.31 
3.37 
2.37 

3.21 
3.15 
3.18 


79 
96 
85 

64 
94 
66 

65 

65 
65 


This  tabulation  shows  that  the  prices  of  western  manufacturers 
generally  increased  to  a  greater  extent  than  those  of  eastern  manu- 
facturers. Prices  of  western  manufacturers  to  publishers  and  jobbers 
combined  on  machme-finish  paper  increased  $3.43  per  100  pounds,  or 
95  per  cent,  while  the  prices  of  eastern  manufacturers  increased  only 
$2  85,  or  79  per  cent;  prices  of  western  manufacturers  on  super- 
calendered mcreased  $3.37,  or  94  per  cent,  as  compared  with  $2.31, 
or  64  per  cent,  for  eastern  manufacturers.  On  coated,  however,  the 
price  of  both  western  and  eastern  manufacturers  increased  65  per  cent. 

The  largest  increases  shown  are  $4.03  per  100  pounds,  or  110  per 
cent,  on  supercalendered  paper  for  contracts  of  western  manufac- 
turers with  jobbers,  and  $3.61,  or  100  per  cent,  on  machine  finish  for 
contracts  of  western  manufacturers  with  jobbers.  The  smallest 
increase  shown  is  $2.16,  or  60  per  cent,  on  machine  finish  for  contracts 
of  western  manufacturers  with  publishers. 

Jobhers'  vrices.—The  contract  prices  received  by  11  eastern  and  10 
western  jobbers  on  contracts  for  delivery  of  white  book  paper  at 
purchasers'  sidewalk,  1914-1916,  are  shown  below: 

Table  11— Average  net  prices  per  100  pounds  received  by  11  eastern^  and  10  western^ 
jobbers  on  contracts  ^for  delivery  of  white  book  paper  at  purchasers '  sidewalk,  1914-1916. 


Date  of  making  contract. 


IbMdiine  finish: 

1914 

1915 

1916  (first  half)... 

1916  (second  half) . 
Supercalendered: 

1914 

1915 

1916  (first  half)... 

1916  (second  half) . 
Coated: 

1914 

1915 

1916  (first  half).... 

1916  (second  half). 


Eastern  jobbers. 


Total. 


Tom. 
7.893 
5,273 
1,027 
4,116 

3,338 

5,231 

377 

1,652 

230 
6,813 
2,601 
4,208 


PerlOO 
pounds. 


S3. 52 
3.66 
3.61 
6.62 

3.75 
3.79 
4.49 
7.82 

5.16 
5.09 
5.64 
8.07 


Western  jobbers. 


Total. 


PerlOO 
pounds. 


Eastern  and  west- 
em  jobbers  com- 
bined. 


Total. 


Tons. 
9,758 
9,887 
5,882 
4,249 

4,352 
9,433 
2,274 
3,383 

2,225 
2,948 
5,876 
3,352 


S3. 50 
3.61 
4.32 
6.70 

3.90 
3.78 
4.73 
6.75 

6.92 
5.52 
5.88 
8.21 


Tons. 

17,651 

15,160 

6,909 

8,365 

7,690 

14,664 

2,651 

5,03JJ 

2,465 
9,761 
8,477 
7,560 


PerlOO 
pounds. 


S3. 51 
3.63 
4.21 
6.66 


3.84 
3.7S 
4.70 
7.10 


85 
22 


5.80 
8.13 

» Jobbers  east  of  the  Pennsylvania-Ohio  line  and  north  of  the  Potomac 

JrS^JSiL^f  ^  ?r^®  Pennsylvania-OWo  line  and  east  of  the  Mississiwri  River,  but  including  St.  Louis 


I 


I' 


46 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


'  4 


There  was  little  change  in  prices  during  1914  and  1915  except  on 
coated  paper,  where  there  was  a  decided  decrease  in  1915.  During 
lyib,  however,  the  prices  increased  greatly.  . 

The  tabulation  below  shows  the  increases  in  average  prices  of  the 
second  half  of  1916  over  1915:  s    p   ^t;^  ui   tne 


47 


Increase  of  second  half  of  1916  over  the  year  1915. 

Machine  finish. 

Supercalendered. 

Coated. 

PerlOO 
pounds. 

Per  cent. 

PerlOO 
pounds. 

Per  cent. 

PerlOO 
pounds. 

Per  cent. 

Eastern  jobbers 

$2.96 
3.09 
3.03 

81 
86 
83 

S4.03 
2.97 
3.32 

106 
79 
88 

S2.98 
2.69 
2.91 

Western  jobbers 

59 

Eastern  and  western  combined '.'.'..'. 

49 

56 

The  tabulation  shows  that  the  average  prices  of  eastern  and  western 
jobbers  combined  increased  $3.03  per  100  pounds,  or  83  per  cent  on 
machine-finish  paper;  $3.32,  or  88per  cent,  on  supercalendered:  'and 
$^.91,  or  56  per  cent,  on  coated.  Western  jobbers  secured  the  laro^er 
increase  on  machine  finish  and  eastern  jobbers  the  larger  increase'^on 
supercalendered  and  coated.  The  largest  increase  was  $4  03  per  100 
pounds,  or  106  per  cent,  secured  by  eastern  jobbers  on  supercalen- 
dered, and  the  smallest  increase  was  $2.69,  or  49  per  cent,  secured  bv 
western  jobbers  on  coated.  *^ 

Section  3.  OPEN-MARKET  PRICES. 

A  large  proportion  of  the  book  paper  sold  in  the  open  market 
reaches  the  consumer  through  jobbers  located  in  the  various  lar^e 
cities  of  the  country.  A  number  of  western  manufacturers  hancfle 
practically  all  of  their  open-market  sales  in  this  way. 

The  jobbers  maintain  stocks  and  a  delivery  service  in  the  larger 
cities,  and  those  who  buy  from  a  number  of  manufacturers  usually 
have  a  greater  variety  of  grades  and  sizes  than  could  be  secured  from 
any  one  manufacturer.  In  fact,  some  jobbers  carry  hundreds  of 
oirrerent  items. 

Publishers  of  books  usually  buy  in  the  open  market  as  the  paper 
is  needed,  since  only  sufficient  paper  to  print  one  edition  at  a  time  is 
wanted  for  each  book.  This  is  due  to  the  fact  that  the  grades  and 
sizes  may  vary  with  each  book. 

Carload  sales  on  open-market  orders  are  practically  all  shipped 
direct  from  the  miU  to  the  consumer,  even  when  sold  through  a 
jobber.  Sales  by  jobbers  of  over  1  ton  but  less  than  a  carload  may 
be  shipped  direct  from  the  mill  or  delivered  from  the  jobber's 
warehouse.  "' 

Open-marlcet  sales  hy  johhers.— The  ioWowmg  table  shows  the  average 
net  prices  per  100  pounds  received  by  the  principal  jobbers  in  certain 
cities  for  direct  shipments  on  open-market  sales  in  less  than  car- 
load l^^J^tf  of  white  book  paper  delivered  at  purchasers'  sidewalk, 
July,  1916-March,  1917,  inclusive: 


Table  12.—Av€rage  net  prices  per  100  pounds  received  by  principal  jobbers  in  certain 
cities  Jar  direct  shipments  on  open-market  sales  in  less-than-carload  lots  of  white  book 
paper  delivered  at  purchasers'  sidewalk,  July,  1915- March,  1917,  inclusive. 

[Only  direct  shipments  from  mill  to  customers  are  included.] 


Pate  of  order. 


Boston. 


New 
York. 


Machine  finish: 
1915— 

Tliird  quarter 

13.82 

Fourth  quarter 

4.13 

1916—                                   

First  quarter 

4  71 

Second  quarter 

5.49 
7.34 
9.83 

Third  quarter 

Fourth  quarter... 

1917-                              

First  quarter 

Supercalendered: 
1915— 

Third  quarter 

5.37 
4.37 

5.14 
8.10 
&77 
&95 

Fourth  quarter 

1916—                                     

First  quarter 

Second  quarter 

Third  quarter 

Fourth  quarter 

1917-                                     

First  quarter 

Coated: 
1915- 

Third  quarter 

5.50 
5.81 

a  15 
8.43 
9.09 
9.53 

Fourth  quarter 

191ft-                                

First  quarter 

Second  quarter 

Third  quarter 

Fourth  quarter 

1917—                                       

First  quarter 

Philar 
delphia, 
Balti- 
more, 
Roches- 
ter, 
Buffalo, 
and 
Pitts- 
burgh. 


Cleve- 
land, 
Colum- 
bus, and 
Detroit. 


S3. 83 
3.87 

4.44 
6.69 
7.73 

&87 

8.06 


4.19 
4.10 

4.85 
6.27 
6.07 
&76 

&46 


5.72 
5.72 

6.51 
7.94 
8.62 
9.39 

9.48 


J3.74 
3.70 

4.49 
5.95 
7.03 
7.76 

&40 


3.96 
4.11 

4.71 
5.57 

5.77 
7.68 

9.72 


5.79 
5.66 

7.04 
7.69 
7.57 
9.21 

9.50 


13.94 
3.85 

4.60 
5.26 
7.73 
&68 

9.01 


3.95 
4.04 

4.74 
6.12 
7.55 
7.13 

10.19 


5.58 
5.63 

6.99 
a  39 
9.16 
8.73 

7.68 


Chicago. 


$3.98 
3.94 

4.52 
6.47 
7.81 
8.36 

8.39 


4.04 
4.14 

5.13 
6.63 
8.14 

8.87 

8.29 


6.00 
6.25 

7.09 
8.17 
9.80 
9.84 

9.48 


Cincin- 
nati, 

l/ouis- 
ville,and 
St.  Louis. 


$3.74 
3.79 

4.58 
6.47 
7.71 
a  78 

&83 


4.01 
4.03 

4.63 
6.61 
9.06 
9.15 

&76 


6.04 
a  01 

a99 
8.52 
P.  50 
9.67 

9.77 


The  table  shows  that  beginning  with  the  first  quarter  of  1916  there 
were  in  nearly  all  cases  constant  increases  in  open-market  prices  on 
the  grades  and  in  the  cities  shown.i  In  some  cases  there  were  further 
advanc^  in  the  first  quarter  of  1917,  but  in  others  the  prices  remained 
about  the  same  as  those  for  the  fourth  quarter  of  1916,  or  even 
declined. 

For  machine-finish  paper,  the  lowest  average  price  in  the  fourth 
quarter  of  1915  in  any  of  the  cities  shown  was  $3.70  in  the  Philadel- 
phia group,  whUe  the  lowest  in  the  fourth  quarter  of  1916  was  $7  76 
for  the  same^oup.  The  highest  prices  for  the  same  periods  were 
S4.13  and  $9.83,  both  in  Boston. 

For  supercalendered  paper  the  lowest  average  price  in  the  fourth 
quarter  of  1915  was  $4.03  in  the  Cincinnati  group,  and  the  lowest 
price  m  the  fourth  quarter  of  1916  was  $7.13  in  the  Cleveland  group 
1  he  highest  prices  for  the  same  periods  were  $4.37  in  Boston  and 
$9.15  in  the  Cincinnati  group. 


wLT^^^l  Y®''®°°?Z  ^ou^i^es  of  decreases  in  1916,  which  were  as  follows:  In  the  Cleveland  eroun  there 
were  decreases  m  the  fourth  quarter  on  both  supercalendered  paper  and  coated,  in  the  Sdeffi  eroun 


48 


BOOK-PAPER  INDUSTRY. 


iQfrj''^it^P^P^ru^^?,^^f  ^  r^^^^^  P^^^^  ^^  ^^^  ^^^^th  quarter  of 
1915  was  $5.63  m  the  Cleveland  group,  while  the  lowest  price  in  the 
fourth  quarter  of  1916  was  $8.73,  also  in  the  Cleveland  ctoud  The 
Sfo  ^  (5i?^^        ^^^  ^^"^^  periods  were  $6.25  in  Chicago  and  $9.84 

^f  Tmi""^^^^^  'V^^  P""^^^  ^^  ^^^  ^^^^^  ^able  of  the  fourth  quarter 
of  1916  over  the  fourth  quarter  of  1915  are  shown  in  the  following 
tabulation  both  in  dollars  and  percentages: 


Increase  of  fourth  quarter  of  1916  over  fourth  quarter  of  1915. 


City. 


Machine  finish. 


Per  100 
pounds. 


Boston 

New  York 

Philadelphia,  etc 

Cleveland,  etc 

Chicago 

Cincinnati,  etc... 


$5.70 
5.00 
4.06 
4.83 
4.42 
4.99 


Per  cent. 


Supercalendered. 


Per  100 
pounds. 


138 
129 
110 
125 
112 
132 


$4.58 
4.66 
3.57 
3.09 
4.73 
5.12 


Per  cent. 


105 
114 
87 
76 
114 
127 


Coated. 


Per  100 
pounds. 


$3.72 
3.67 
3.55 
3.10 
3.59 
3.66 


Per  cent. 


84 
64 
63 

55 
57 
61 


The  tabulation  shows  that  the  greatest  advances  in  prices  were  on 
machine-finish  paper  and  the  lowest  on  coated. 

On  machine-finish  paper,  the  greatest  advance  in  prices  was  $5.70 
per  100  pounds,  or  138  per  cent,  in  Boston.  The  smallest  increase 
on  this  grade  was  $4.06,  or  110  per  cent,  in  the  PhHadelphia  group 

On  supercalendered  paper,  the  greatest  advance  was  $5.12  per 
100  pounds,  or  127  per  cent,  m  the  Cincinnati  group,  while  the  smaUest 
mcrease  was  $3.09,  or  76  per  cent,  in  the  Cleveland  group 

On  coated  paper  the  greatest  advance  was  $3.72  per  100  pounds  or 
64  per  cent,  m  Boston,  while  the  smallest  advance  was  $3  10  or' 55 
per  cent,  m  the  Cleveland  group.  ' 

The  foUowing  table  shows  the  average  net  prices  per  100  pounds 
secured  by  jobber,  m  New  York  and  Chicago  for  direct  shipL^nTon 
open-market  sales  m  carload  lots:  ^ 

Table  13. —Average  net  prices  per  100  pounds  received  by  jobbers  in  New  York  and  Chicaoo 
for  direct  shipmmts  on  open-market  sales  in  carload  Ls  of  white  bookpapTdeli^fed 
at  purchasers'  sidewalk,  July,  1915- March,  1917,  inclusive  ^     aenverea 

[Only  direct  shipments  from  mill  to  customers  are  included.] 


Date  of  order. 


1915: 

Third  quarter. . 

Fourth  quarter. 
1916: 

First  quarter... 

Second  quarter. 

Third  quarter. . 

Fourth  quarter. 
1917: 

First  quarter... 


Machine  finish. 


Supercalendered. 


New       ^.  . 
York.      Chicago. 


$4.31 
4.24 

4.55 
5.23 
6.83 
8.00 

8.11 


New 
York. 


$3.97 
3.67 

5.15 
6.49 
6.93 
8.00 

7.57 


$3. 
4. 


83 
20 


Chicago. 


Coated. 


8.44 


$3.77 
4.12 


5.86 

5.10 

5.37 

6.15 

6.91 

8.40 

&21 

8.17 

New 
York. 


8.53 


$6.49 
5.82 

6.11 
7.59 
8.06 
9.19 

9.31 


Chicago. 


$5.88 
5.72 

6.26 
8.35 
9.43 
9.67 

9.19 


BOOK-PAPER  INDUSTRY. 


49 


In  general,  the  prices  on  carload  sales  in  the  above  table  are  some- 
what lower  than  those  shown  for  the  same  cities  on  less  than  carload 
sales  in  Table  12,  above,  especially  during  the  last  two  quarterr^  of 
1916.  ^  to  4 

The  tabulation  below  shows  the  increase  of  the  fourth  quarter  of 
1916  over  the  fourth  quarter  of  1915  for  the  prices  shown  above: 


Increase  of  fourth  quarter  of  1916  over  fourth  quarter  of  1915. 

City. 

Machine  finish. 

Supercalendered. 

Coated. 

Per  100 
pounds. 

Per  cent. 

Per  100 
pounds. 

Per  cent. 

Per  100 
pounds. 

Per  cent. 

New  York 

$3.76 
4.33 

89 
118 

$4.01 
4.05 

95 
95 

$3.37 
3.95 

C  hicago 

58 

69 

In  most  cases,  the  increase  was  not  as  great  on  the  carload  sales 
as  on  the  less-than-carload  sales  shown  in  the  tabulation  on  page  48 
above.  However,  the  per  cent  of  increase  in  Chicago  on  carload 
sales  of  machine-finish  paper  and  coated  was  somewhat  higher  than 
on  less-than-carload  sales. 

Open-marlcet  purchases  hy  puhUsTiers.— The  table  below  shows  the 
average  net  prices  paid  by  publishers  in  certain  cities  on  open- 
market  purchases  in  less  than  carload  lots: 

Table  14.~-Average  net  prices  per  100  pounds  paid  by  principal  publishers  in  certain 
nties  on  open-market  purchases  in  less-than-carload  lots  of  white  book  paper  delivered  at 
sidewalk,  1915-16. 


Date  of  order. 


Machine  finish: 
1915— 

First  quarter. . . 

Second  quarter. 

Third  quarter. . 

Fourth  quarter. 
191fr- 

First  quarter. . . 

Second  quarter. 

Third  quarter. . 

Fourth  quarter. 
1917— 

First  quarter... 
Supercalendered: 
1915— 

Firso  quarter 

Second  quarter., 

Third  quarter. . . 

Fourth  quarter. 
1916— 

First  quarter 

Second  quarter.. 

Third  quarter. . . 

Fourth  quarter., 
1917— 

First  quarter 

Coated: 
191S- 

First  quarter 

Second  quarter.. 

Third  quarter. . . 

Fourth  quarter.. 
1916- 

First  quarter.... 
Second  quarter.. 
Third  quarter. . . 
Fourth  quarter.. 


Boston. 


$4.25 


18 
22 
22 

45 
92 
21 
54 


New 
York. 


$3.92 
3.99 
4.07 
4.07 

4.42 
5.56 
6.63 
7.5J 


Phila- 
delphia. 


4.32 
4.64 
4.33 
4.29 

4.54 
5.12 
7.14 
8.49 


L39 
5.43 
5.40 
5.60 

5.69 
5.76 
7.75 
8.61 


71 
67 
72 
62 


3.88 
4.91 
5.95 
6.54 


$3.81 
3.97 
4.17 
3.98 

4.42 
5.90 
6.39 
7.27 


Balti- 
more. 


5.86 
5.60 
5.41 
5.34 

5.30 
6.84 
7.92 
8.26 


4.86 
4.64 
4.50 

5.40 
6.72 
7.33 
8.49 


y4.14 
4.00 
3.91 
4.47 

4.88 
6.90 
6.76 
7.59 

8.32 


4.87 


Cleve- 
land. 


$3.92 


04 
48 

87 

60 
04 


Chicago. 


58 
69 
08 

92 
64 
81 


6.35 
6.57 
6.27 
5.89 

7.01 
8.36 
8.22 
8.29 


9.88 
J. 73 


5.55 
5.44 
5.34 
5.39 

6.17 
8.34 


9.70 


8.18 
9.19 

7.90 


4.13 
4.69 
4.47 
4.79 

4.83 
7.89 
5.88 


8.68 


7.58 
6.72 
6.71 
5.73 

5.82 

8.80 

6.54 

11.07 


$3.81 
3.88 
3.94 

4.49 
6.54 
6.52 
i.32 

8.46 


3.95 
3.99 
3.87 

4.03 
5.83 
6.31 
6.77 

8.07 


12159'— S.  Doc.  79,  6&-1- 


i 


m 


^'  ■■ 


I 


50 


BOOK-PAPER  INDUSTBY. 


f},J  JV       .  '^.^?^^e|  open-market  purchases  for  the  publishers  in 
the  different  cities  from  whom  prices  were  secured.     It  includes 
not  only  purchases  from  jobbers  for  direct  shipment  from  the  mill 
but  aJso  purchases  delivered  from  jobbers'  warehouse  stocks  and 
purchases  from  manufacturers. 

durinri91^  ^'^^^^  ''^^''^^  '"^  ^''''^^  ^'''''''^  ^^^^'  ^"^  ^  ^""^'^  ^""^^^^^ 

For  machine-finish  paper,  the  lowest  average  price  in  any  of  the 

rwi     7""  m  the  fourth  quarter  of  1915  was  $3.87  per  100  pounds  in 

fn  Ph  f«HplI^  '  ^T^^""'"^^  ?  ^^'  fourth  quarter  of  1916  was  $7.27 
in  Fhiladelphia.  The  highest  prices  for  the  same  periods  were  $4  47 
in  Baltimore  and  $9.19  in  Cleveland.  ^  weie  ^^.^/ 

For  supercaJendered  paper,  the  lowest  price  in  the  fourth  quarter 
of  1915  was  $3.62  per  100  pounds  in  New  York,  while  the  lowest  in 
the  fourth  quarter  of  1916  was  $6.54,  also  in  New  York.  The  highest 
SalSmor  ^^^  ^^""''^"^^  "^^^^  ^^'^^  '"^  Cleveland  and  $9.88  in 

wn^""*.?/*^"^  Fnr''  ^^A  ^^"^^^^  P^^^^.  ^^  ^^^  ^^^^th  quarter  of  1915 
was  $5.34  per  100  pounds  m  New  York,  while  the  lowest  in  the  fourth 
quarter  of  1916  was  $8.26  in  the  same  city.  The  highest  prices  for 
tlie  same  periods  were  $5.89  m  Philadelphia  and  $11.07  in  Cleveland 
Ihe  increases  m  the  prices  in  the  preceding  table  in  the  fourth 
quarter  of  1916  over  the  fourth  quarter  of  1915  are  shown  iiT the  fol^ 
lowing  tabulation  m  dollars  per  100  pounds  and  in  per  cents: 


city. 


Increase  of  fourth  quarter  of  191b  over  fourth  quarter  of  1915. 


Machine  finish. 


Per  100 
pounds. 


Boston 

New  York . . . 
Philadelphia . 

Baltimore 

Cleveland 

Chicago 


$3.32 
3.48 
3.29 
3.12 
5.32 
4.38 


Per  cent. 


79 
86 
83 
70 
137 
ill 


Supercalendered. 


Per  100 
pounds. 


Coated. 


S4.20 
2.92 
3.99 
5.80 

•3.89 
Z90 


Percent.    ^^^  "» 
I  pounds. 


Per  cent. 


98 
81 
89 
142 
81 
75 


S3. 01 
2.92 
2.40 
4.31 
5.34 


54 
55 
41 
SO 
93 


» Increase  of  first  quarter  of  1917  over  fourth  quarter  of  1915 

On  machine-finish  paper  the  greatest  increase  in  any  of  the  cities 
shown  was  $5.32  per  100  pounds,  or  137  per  cent,  in  Cleveland,  while 
the  smallest  increase  was  $3.12,  or  70  per  cent,  in  Baltimore 

On  supercalendered  paper  the  greatest  increase  was  $5.80  per  100 

^9  on    '  ""^r:^^^  P^"*  cent,  in  Baltimore,  and  the  smaUest  increase  was 
$2.90,  or  75  per  cent,  m  Chicago. 

On  coated  paper  the  greatest  increase  was  $5.34  per  100  pounds,  or 
93  per  cent,  m  Cleveland,  and  the  smallest  increase  was  $2.40  or  41 
per  cent,  m  Philadelphia. 

Section  4.  JOBBERS'  GROSS  MARGINS  OF  PROFIT. 

A  large  proportion  of  book  paper  reaches  the  consumer  through 
jobbers.  In  many  cases  certain  jobbers  have  the  exclusive  agencv 
for  one  or  more  manufacturers  in  a  large  territory  (see  p  32)  On 
contract  sales  eastern  jobbers  handle  only  a  small  proportion  of  the 


BOOK-PAPER  INDUSTRY. 


51 


business,  while  western  jobbers  handle  a  large  part  of  the  contract 
business  of  western  manufacturers.  On  open-market  sales  most  of 
the  business  is  handled  by  jobbers,  especially  in  the  West. 

There  were  very  few  cases  where  the  increases  in  gross  margins  in 
the  second  half  of  1916  over  the  year  1915  were  less  than  100  per  cent 
except  on  coated  paper,  while  in  some  cases  the  increases  were  over 
500  per  cent.  One  Chicago  jobber  had  an  average  gross  margin  dur- 
ing the  second  half  of  1916  on  all  grades  combined  of  over  $28  a  ton 
on  direct  shipments  from  mill  to  customer  in  less  than  carload  lots. 

The  margins  shown  in  the  following  tables  are  solely  on  direct  ship- 
ments from  mill  to  customer.  It  was  impracticable  to  secure  the 
margins  on  sales  of  paper  that  passed  through  the  jobbers'  stocks,  as 
the  cost  and  selling  prices  of  the  same  lots  of  paper  could  not  be  ascer- 
tained. However,  practically  all  the  contract  sales  are  for  direct 
shipment,  while  during  1916  a  larger  number  of  open-market  sales 
were  also  for  direct  shipment  than  was  the  case  before. 

The  margins  represent  the  difference  between  the  manufacturer's 
price  to  the  jobber  and  the  jobber's  price  to  the  customer,  both 
prices  being  for  delivery  at  customer's  sidewalk,  thus  including  freight 
and  cartage. 

Contract  sales. — The  average  gross  profits  of  jobbers^  on  contract 
sales  are  shown  below: 

Table  15. — Average  gross  profits  of  11  eastern  and  10  western  jobbers  cm  contracts  far 
delivery  of  white  book  jpaper  at  purchasers^  sidewalk,  1914-1916. 


Date  of  makiiig  contract. 


Machine  finish: 

1914 

1915 

1916  (first  half).-. 

1916  (second  half) 
Supercalendered : 

1914 

1915 

1916  (first  half)... 

1916  (second  half) 
Coated: 

1914 

1915 

1916  (first  half)... 

1916  (second  half) 


Eastern  jobbers. 


Per  100 
pounds. 


$0.16 
.24 
.13 
.45 

.13 
.26 
.36 

.87 

.35 

.38 
.30 
.47 


Per  cent 

of  price 

paid. 


5 
7 
4 
7 

4 

7 

9 

13 

7 
8 
6 
6 


Western  jobbers. 


PerlOO 
pounds. 


$0.15 
.17 
.30 
.39 

.19 
.16 
.24 
.55 

.47 
.37 
.38 
.43 


Per  cent 

of  price 

paid. 


Eastern  and  west- 
em  jobbers  com- 
bined. 


PerlOO 
I>ounds. 


?0.15 
.20 
.27 
.42 

.17 
.20 
.26 
.66 

.46 
.38 
.35 

.45 


Per  cent 

of  price 

paid. 


4 

6 
7 
7 

5 

6 

6 

10 

9 
8 
6 
6 


The  table  shows  that  there  was  a  general  increase  in  profits, 
expressed  in  dollars  per  100  pounds,  on  both  machine  finish  and 
supercalendered  paper  during  the  period  1914  to  1916,  inclusive. 
With  one  exception,  the  margins  on  coated  paper  were  lower  in  1915 
and  the  first  half  of  1916  than  in  1914,  but  increased  in  the  second 
half  of  1916  as  compared  with  the  first  half  of  1916. 

The  margins  in  percentages  of  cost  prices  to  jobbers  also  increased 
during  the  period  shown  on  machine  finish  and  supercalendered 
paper,  but  decreased  on  coated.    In  spite  of  the  enormous  increases 

1  These  profits  are  on  the  sales  shown  in  Table  11,  on  p.  45. 


,i; 


i 


52 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPEB  INDUSTRY. 


53 


^  1 


in  prices,  the  gross  margins  in  percentages  increased  in  the  second 
half  of  1916  as  compared  with  1914  for  eastern  and  western  jobbers 
combined,  from  4  per  cent  to  7  per  cent  on  machine  finish  and  from 
5  per  cent  to  10  per  cent  on  supercalendered,  while  on  coated  there 
was  a  decrease  from  9  per  cent  to  6  per  cent.  The  largest  increase 
in  percentages  was  made  by  eastern  jobbers.  This  was  from  4  per 
cent  in  1914  to  13  per  cent  in  the  second  half  of  1916  on  super- 
calendered. 

Owing  to  the  fact  that  the  jobbers'  expenses  of  handhng  paper  per 
100  pounds  increased  but  httle  in  1916,  a  better  standard  of  showing 
the  mcreased  profits  of  jobbers  for  the  second  half  of  1916  as  com- 
pared with  the  year  1915  and  also  with  the  year  1914  is  presented 
by  giving  the  increase  in  the  gross  margins  in  dollars  per  100  poimds. 
lliis  is  shown  in  the  following  tabulation: 


Grade. 


Machine  finish: 

Eastern  jobbers 

Western  jobbers 

Eastern  and  western  combined 
Supercalendered : 

Eastern  jobbers 

Western  jobbers 

Eastern  and  western  combined . 
Coated: 

Eastern  jobbers 

Western  jobbers 

Eastern  and  western  combined. 


Increase  of  second 
half  of  1916  over 
the  year  1915. 


Per  100 
povmds. 


SO.  21 
.22 
.22 

.61 
.39 
.46 

.09 
.06 
.07 


Per  cent. 


129 
110 

235 
244 
230 

24 
16 
18 


Increase  of  second 
half  of  1916  over 
the  year  1914. 


Per  100 
pounds. 


$0.29 
.24 
.27 

.74 
.36 
.49 

.12 
>.04 
».01 


Per  cent. 


181 
160 
180 

569 
189 
288 

34 
19 
12 


*  Decrease. 


Comparing  the  second  half  of  1916  with  the  year  1915,  the  table 
shows  that  the  increase  in  gross  margins  for  eastern  and  western 
jobbers  combined  was  22  cents  per  100  pounds,  or  110  per  cent,  on 
machine-finish  paper;  46  cents,  or  230  per  cent,  on  supercalendered; 
and  7  cents,  or  18  per  cent,  on  coated.  The  highest  increase  in  per- 
centage in  the  second  half  of  1916  over  1915  was  244  per  cent  for 
western  jobbers  on  supercalendered,  and  the  lowest  was  16  per  cent 
for  western  jobbers  on  coated. 

Comparing  the  second  half  of  1916  with  the  year  1914,  the  increases 
were  even  greater,  except  on  coated  paper.  Taking  these  periods,  the 
increase  for  eastern  and  western  jobbers  combined  was  27  cents  per 
100  pounds,  or  180  per  cent,  on  machine  finish,  and  49  cents,  or  288 
per  cent,  on  supercalendered,  while  on  coated  the  margin  was  1 
cent,  or  2  per  cent,  less  in  the  second  half  of  1 9 1 6  than  in  the  year  1914. 
Excluding  coated,  the  greatest  increase  in  percentages  was  569  per 
cent  for  eastern  jobbers  on  supercalenderea  and  the  lowest  was  160 
per  cent  for  western  jobbers  on  machine  finish.  On  coated,  the  mar- 
gin of  eastern  jobbers  increased  12  cents  per  100  pounds,  or  34  per 
cent,  while  the  margin  of  western  jobbers  decreased  4  cents,  or  9  per 
per  cent. 


Open-market  sales. — ^The  gross  margins  on  open-market  sales  for 
direct  shipment  in  less-than-carload  lots  ^  increased  much  more  than 
those  on  contract  sales.  These  margins  for  jobbers  in  certain  cities 
are  shown  below: 

Table  16. — Average  gross  profits  of  principal  jobbers  in  certain  cities  for  direct  shipments 
on  open-market  sales  in  less-than-carload  lots  of  white  booh  paper  delivered  at  purchasers' 
sidewalk,  July,  1915-March,  1917,  inclu^ve. 


Date  of  order. 


Machine  finish: 
1915— 

Third  quarter.. 

Fourth  quarter. 
1916— 

First  quarter. . . 

Second  quarter. 

Third  quarter.. 

Fourth  quarter. 
1917— 

First  quarter. . . 
Supercalendered : 
1915— 

Third  quarter. . 

Foiu-th  quarter. 
1916- 

First  quarter. . . 

Second  quarter. , 

Third  quarter.. 

Fourth  quarter. 
1917— 

First  quarter 

Coated: 
1915— 

Third  quarter. . . 

Fourth  quarter., 
1916— 

First  quarter. . . . 

Second  quarter.. 

Third  quarter... 

Fourth  quarter. . 
1917— 

First  quarter 


Boston. 


8 


10.36 
.48 

.56 
1.00 

.67 
2.13 


.38 
.49 

.80 
.97 
.63 
.49 


S 


-S"3 


New  York. 


10 
13 

13 
22 
10 
28 


8 
13 

18 

14 

8 

6 


.48 
.51 

.64 
.95 
.93 
.73 


10 
10 

12 
13 
11 

8 


a 

8 


<0.30 
.30 

.44 
.70 
.93 
.90 

.70 


,49 
,41 


8 
©•o 


;-a 


8 


.61 

.57 
.35 

,77 

,65 


.48 
.48 

.61 
.81 
.95 
.83 

,79 


8 
8 

11 
14 
14 
11 

10 


13 
11 

14 

10 

6 

10 


9 
9 

10 
11 
12 
10 

9 


Philadel- 

(>hia, 
timore, 
Rochester, 
Buffalo, 
and  Pitts- 
burgh. 


a 

8 


Ph 


SO.  29 
.25 

.59 

.98 

1,70 

1.14 

.80 


.25 
.30 

.39 
1.01 

.67 
1.56 

.87 


.48 
.55 

.78 
1.14 
1.05 
1.02 

1.01 


8 

u 

©•d 


CI 

8 


8 
7 

15 
20 
32 
17 

11 


7 
8 

9 
22 
13 
25 

10 


9 
11 

12 
17 
16 
12 

12 


Cleveland, 

Columbus, 

and 

Detroit. 


o 
a 

8 

(.1 
» 


$0.35 
.33 

.64 
.47 
.85 
.76 

.82 


.31 

.28 

.47 
.63 
.96 
.93 

.94 


.40 
.41 

.82 

.68 

1.00 

.73 

.54 


s 

P« 

©•o 

(l4 


10 
9 

16 
10 
12 
10 

10 


9 

7 

11 
11 
15 
15 

10 


8 
8 

13 
9 

12 
9 


Chicago. 


-a 


o 
8 

tk 


s 

u 

p. 

•l-l 

©TS 

Sft 

8 

» 
PK 


10.31 
.35 

.40 
.56 
.90 
.94 

.80 


.28 
.30 

.48 
.66 
.66 
.99 

.88 


.49 
.54 

.72 
1.08 

.85 
1.05 

1.04 


8 
10 

10 

9 

13 

13 

11 


7 
8 

10 

11 

9 

13 

12 


9 
9 

11 

15 

9 

12 

12 


Cincinnati, 
Louisville, 

and 
St.  Louis. 


-s 

a 
s 
© 
Pi 

8 


$0.29 
.33 

.49 

.47 
1.07 
1.00 

.74 


.24 
.21 

.45 

.52 

.86 

1.03 

.80 


.76 
.82 

.60 
.69 
.91 
.62 

.81 


8 

.^^ 

ki 

©73 

8^ 

hi 

9 

P4 


8 
10 

12 

8 

16 

13 

9 


6 
5 

11 

9 

10 

13 

10 


14 
16 

9 

9 

11 

7 

9 


Large  margins  were  secured  by  jobbers  in  1916  in  all  the  cities 
shown  and  on  all  three  grades. 

On  machine-finish  paper,  the  lowest  margin  in  any  city  in  the  third 
quarter  of  1915  was  29  cents  per  100  pounds  in  the  Philadelphia  and 
Cincinnati  groups,  and  the  highest  was  36  cents  in  Boston.  In  the 
fourth  quarter  of  1916,  the  lowest  margin  on  this  grade  was  76  cents 
in  the  Cleveland  group  and  the  highest  was  $2.13  in  Boston,  while 
the  margin  in  the  Philadelphia  group  was  $1.14  and  in  the  Cincinnati 
group  "" 


1  These  margins  are  on  the  sales  shown  in  Table  12,  on  p.  47. 


I! 


•M 


i 


,  \ 


54 


BOOK-PAPER  INDUSTKT. 


On  supercalendered  paper,  the  lowest  margin  in  the  third  quarter 
of  1915  was  24  cents  per  100  pounds  in  the  Cincinnati  group  and  the 
highest  was  49  cents  in  New  York.  In  the  fourth  quarter  of  1916, 
the  lowest  margin  was  49  cents  in  Boston  and  the  highest  was  $1.56 
m  the  Philadelphia  group,  while  the  margin  in  the  Cincinnati  group 
was  $1.03  and  in  Chicago  99  cents. 

On  coated  paper,  the  lowest  maran  in  the  third  quarter  of  1915 
was  40  cents  per  100  pounds  in  the  Cleveland  group  and  the  highest 
was  76  cents  in  the  Cincinnati  group.  In  the  fourth  quarter  of  1916, 
the  lowest  margin  was  62  cents  m  the  Cincinnati  group  and  the 
highest  was  $1.05  in  Chicago,  while  the  margin  in  the  Philadelphia 
group  was  $1.02. 

The  margins  in  percentages  of  the  purchase  price  of  the  jobbers  also 
increased  m  1916  m  spite  of  the  rapid  increase  in  the  prices  on  which 
they  are  based. 

Comparing  the  fourth  quarter  of  1916  with  the  third  quarter  of 
1915,  the  greatest  increase  in  percentages  on  machine-finish  paper 
was  from  10  per  cent  to  28  per  cent  in  Boston,  while  in  the  Cleveland  • 

froup  there  was  no  increase,  the  percentage  being  10  per  cent  for 
oth  periods.  On  supercalendered,  the  greatest  increase  was  from 
7  per  cent  to  25  per  cent  in  the  Philadelphia  group,  while  there  was 
a  decrease  from  13  per  cent  to  10  per  cent  in  New  York.  On  coated, 
the  greatest  increase  was  from  9  per  cent  to  12  per  cent  in  both  the 
Philadelphia  and  Chicago  groups,  while  there  was  a  decrease  from  14 
per  cent  to  7  per  cent  in  the  Cincinnati  group. 

The  increase  in  the  margins  in  dollars  per  100  pounds,  as  stated 
above,  shows  the  real  situation  better  than  the  increase  based  upon 
the  percentage  of  purchase  price  of  jobbers.  These  margins  are  shown 
in  the  f  oUowmg  tabulation : 


City. 


Boston 

New  York 

Philadelphia,  etc 

Cleveland,  etc 

Chicago , 

Cincinnati,  etc. . , 


Increase  of  fourth  quarter  of  1916  over  third  quarter  o.  1915. 


Machine  finish. 


Per  100 
pounds. 


$1.77 
.60 
.85 
.41 
.63 
.71 


Percent. 


492 
200 
293 
117 
203 
245 


Supercalendered. 


Per  100 
pounds. 


SO.  11 
.28 
1.31 
.62 
.71 
.79 


Per  cent. 


29 
57 
524 
200 
254 
329 


Coated. 


Per  100 
pounds. 


$0.25 
.35 
.54 
.33 
.56 

».14 


Per  cent. 


52 

73 

113 

83 

114 

U8 


1  Decrease. 


The  tabulation  shows  that  the  increases  in  margins  were  very  large 
especially  on  machine  finish  and  supercalendered  paper,  the  increases 
m  ten  out  of  twelve  cases  being  over  100  per  cent.     On  coated,  how- 
ever, in  only  two  cases  out  of  six  were  there  increases  of  over  100 
per  cent. 

On  machine-finish  paper,  the  lowest  increase  was  41  cents  per  100 
pounds,  or  117  per  cent,  in  the  Cleveland  group,  and  the  highest 
mcrease  was  $1.77,  or  492  per  cent,  in  Boston. 


BOOK-PAPEE  INDUSTRY. 


55 


On  supercalendered  paper,  the  lowest  increase  was  11  cents  per 
100  pounds,  or  29  per  cent,  in  Boston,  and  the  highest  was  $1.31,  or 
524  per  cent,  in  the  Philadelphia  group. 

On  coated  paper,  there  was  a  decrease  of  14  cents  per  100  pounds, 
or  18  per  cent,  in  the  Cincinnati  group.  Of  the  increases  the  lowest 
was  25  cents,  or  52  per  cent,  in  Boston,  and  the  highest  was  56  cents, 
or  114  per  cent,  in  CJhicago. 

While  the  fourth  quarter  of  1916  has  been  taken  for  the  purpose 
of  showing  the  increase  in  jobbers'  margins,  it  will  be  seen  by  referring 
to  Table  16,  p.  53,  that  in  most  cases  the  greatest  average  margins 
were  secured  in  the  second  or  third  quarters  of  1916.  Therefore,  if 
the  greatest  margins,  rather  than  the  margins  in  the  fourth  quarter  of 
1916  only,  had  been  used,  the  increases  in  most  cases  would  be  much 
larger  than  those  given  above,  as  is  shown  by  the  following  tabulation: 


aty. 


Boston 

New  York 

Philadelphia,  etc 

Cleveland,  etc 

Chicago 

Cincinnati,  etc.. 


Increase  of  highest  average  mar^ns  in  any  quarter  of  1916  over 
average  margin  in  third  quarter  of  1915. 


Machine  finish. 


Per  100 
pounds. 


$1.77 
.63 
1.41 
.50 
.63 
.78 


Per  cent. 


492 
210 
486 
143 
203 
269 


Supercalendered. 


Per  100 
pounds. 


$0.59 
.28 
1.31 
.65 
.71 
.79 


Per  cent. 


155 
57 
524 
210 
254 
329 


Coated. 


Per  100 
pounds. 


$0.47 
.47 
.66 
.60 
.59 
.15 


Per  cent. 


98 

98 

138 

150 

120 

20 


Cost  of  doing  business. — The  cost  of  doing  business  on  sales  of  book 
paper  could  not  be  secured  as  all  jobbers  handle  many  other  lines  of 
paper  such  as  news,  writing,  wrapping,  etc.,  and  practically  none  of 
the  jobbers  keep  a  separate  cost  for  the  book  paper  sold.  Where  the 
costs  were  secured  on  the  whole  business,  certain  items  were  included, 
such  as  freight  and  cartage,  which  are  not  included  in  the  gross  mar- 
gins shown  in  this  section. 

The  data  secured  indicates  that  there  was  little  or  no  increase  in  the 
cost  of  doing  business  per  100  pounds  of  paper  handled  in  1916  as  com- 
pared with  1915.  Therefore,  the  margins  shown  in  this  section  indi- 
cate that  the  net  profits  of  jobbers  in  dollars  during  the  second  half  of 
1916  were  at  least  100  per  cent  greater  than  in  1915,  and  probably 
nearer  150  per  cent  greater. 


A 


k-\ 


i 


I 


56 


BOOK-PAPEB  INDUSTRY. 


BOOK-PAPEB  INDUSTRY, 


57 


Section  6.  ADDITIONAL  COST  OP  BOOK  PAPEK  TO  CONTBACT 

PUBCHASERS  IN  1017. 

The  additional  cost  to  certain  purchasers  resulting  from  the  advance 
in  prices  of  the  book  paper  purchased  under  contract  during  the  year 
1917  is  shown  in  the  foDowmg  table: 

Table  17 .—Increases  in  contract  prices  to  he  paid  to  manufacturers  hy  certain  purchasers 
of  white  book  paper  in  1917  as  compared  with  prices  paid  in  1916  far  the  same  ton- 


nages. 


[Deliveries  at  purchasers'  sidewalk.) 


Grade  of  paper  and  class  of  purchaser. 


Tons  to 
be  de- 
livered in 
1917.' 


Increase 

in  net 

price  per 

ton  of  1917 

over  1916 


Machine  finish: 
Publishers- 
No.  1 

No.  2 

No.  3 

No.4 

No.  5 

No.  6 

No.  7 

Printers- 
No.  1 

No.  2 

No.  3 

No.4.:... 

No.  5 

Commercial- 
No.  1 

No.  2 

No.  3 

Suporcalendered: 
Publishers - 

No.  1 

No.  2 

No.  3 

No.4 

No.  5 

No.  6 

No.  7 

Printers — 

No.  1 

No.2 

No.3 

No.4 

No.5 

Commercial — 

No.  1 

No.2 


42 

69 

70 

75 

158 

1S3 

285 

112 
114 
150 

207 
232 

75 

»184 

750 


flO 

368 

1,550 

4,450 

7,500 

13,000 

13,400 

100 
263 
266 
341 
543 

•28 

M75 


S52.40 
96.60 
65.20 
75.40 
81.60 
87.20 
84.20 

85.20 
87.20 
75.60 
77.40 
87.20 

82.40 
S4.40 
97.80 


81.40 
87.60 
45.80 
49.00 
47.20 
47.00 
45.40 

75.80 
87.40 
87.40 
91.60 
89.40 

94.20 
82.40 


Increase  in 
net  amount 
to  be  paid 

for  1917 

tonnage  as 

compared 

with  that 

paid  in 

1916  for  the 

same 
tonnage. 


J2,200.80 
6,665.40 
4,564.00 

5, 65,5.  no 

12,892.80 
15,957.60 
23,997.00 

9,542.40 

9,940.80 

11,340.00 

10,021.80 

20,230.40 

6, 180. 00 
15,  .529. 60 
73,350.00 


4,884.00 
32,236.80 
70,990.00 
218,050.00 
354,000.00 
611,000.00 
608,360.00 

7,580.00 
22,986.20 
23, 248.  40 
31,235.60 
48,544.20 

2,731.80 
14,420.00 


ex'cJp^ti^^S^tSl"*  °''  ^'''^t'*^*^  ™*de  in  November  and  December,  1916,  for  deUveries  during  1917,  with 

*  Contract  for  this  tonnage  was  dated  Sept.  27, 1916. 

*  This  tonnage  was  for  the  sLx-month's  period  from  Dec.  1, 1916,  to  June  1. 1917 

*  Contract  for  this  tonnage  was  dated  Oct.  30, 1918.  uuo  x,  x»i « . 

The  table  shows  that,  in  general,  the  increases  in  the  net  prices 
per  ton  were  largest  for  commercial  users  and  smallest  for  pub- 
hshers.  This  is  especially  striking  in  the  case  of  supercalend^red 
paper.  Nevertheless,  the  prices  per  ton  shown  on  contracts  for 
supercalendered  with  pubhshers  using  over  1,500  tons  show  increases 
rangmg  from  $45.40  to  $49.  The  five  contracts  for  over  1,500  tons 
of  supercalendered  were  all  with  pubhshers  of  periodicals. 


The  increase  in  the  amount  to  be  paid  for  the  entire  tonnage 
taken  by  two  of  these  purchasers  of  supercalendered  paper  is  over 
$600,000  each.  The  increase  to  be  paid  by  another  is  over  $350,000 
and  by  another  over  $200,000. 

It  should  be  understood,  of  course,  that  the  purchasers  listed  in 
the  table  above  do  not  all  buy  from  the  same  manufacturer.  How- 
ever, for  machine-finish  paper,  pubhshers  Nos.  1,  5,  6,  and  7,  printers 
Nos.  1,  2,  and  5,  and  commercial  user  No.  1  are  all  buying  from 
the  same  company,  and  for  supercalendered,  pubhshers  Nos.  1  to 
7,  inclusive,  printers  Nos.  2  to  5,  inclusive,  and  commercial  user 
No.  2  are  all  buying  from  this  same  manufacturer.  It  will  be  seen 
from  the  table  that  the  prices  of  this  manufacturer  vary  considerably 
to  diflFerent  purchasers. 

Section  6.-  DISPABITY  AND  DISCRIMINATION  IN  PBICES  IN  1016 

AND  1017. 

Disparity  and  discrimination  in  prices  to  different  consumers  of 
book  paper  were  quite  marked  during  1916  and  continued  into  1917. 
By  disparity  in  prices  is  meant  different  prices  charged  purchasers 
for  the  same  weight  and  grade  of  paper  by  different  sellers,  and 
by  discrimination  in  prices  is  meant  different  prices  charged  pur- 
chasers for  the  sanie  weight  and  grade  of  paper  by  the  same  seller. 

Disparity  in  'prices. — ^Most  of  tne  cases  of  disparity  were  due  to 
the  general  refusal  of  manufacturers  and  jobbers  to  supply  paper 
to  any  except  their  regular  customers.  As  there  was  no  competition 
between  sellers,  each  was  able  to  charge  very  high  prices  without 
fear  of  losing  his  customers'  business.  A  number  of  pubhshers  gave 
information  on  this  point. 

The  pubhsher  of  an  important  New  York  magazine  stated  that  he 
was  unable  to  purchase  any  considerable  quantity  of  paper,  except 
from  the  one  manufacturer  from  whom  his  company  had  been 
buying. 

The  publisher  of  another  important  New  York  magazine  stated 
that  he  had  been  buying  all  his  paper  from  one  manufacturer.  Dur- 
ing 1916  he  tried  to  buy  elsewhere,  but  was  unable  to  do  so. 

The  pubhsher  of  a  number  of  New  York  magazines  stated  that  a 
regular  customer  of  one  manufacturer  applying  to  another  manufac- 
turer for  paper  would  be  refused  by  that  manuiacturer. 

The  puohsher  of  a  number  of  trade  journals  in  New  York  stated 
that  he  was  unable  to  buy  from  anyone  except  those  from  whom  he 
had  been  buying  regularly. 

A  New  York  publisher  of  school  books  stated  that  he  could  not 
buy  from  other  concerns  than  those  from  which  he  had  been  buying 
in  the  past.  Whenever  he  made  apphcation  to  a  new  concern  he  was 
invariably  informed  that  they  had  so  many  unfilled  orders  on  hand 
that  they  were  unable  to  supply  a  new  customer. 

A  book  publisher  in  New  York  stated  that  he  could  not  get  any 
paper  from  new  sources.  He  thought  this  was  due  to  each  seller 
trying  to  supply  his  regular  customers  and  not  to  agreement. 
♦  The  pubhsher  of  an  important  weekly  in  New  York  stated  that  he 
had  been  unable  to  buy  from  any  other  sources  than  those  houses 
with  which  he  had  been  dealing  for  a  number  of  years.  Other  manu- 
facturers and  jobbers  would  give  him  quotations,  but  their  conditions 
as  to  time  and  dehvery  were  such  that  he  could  not  accept. 


m 


I' 


58 


BOOK-PAPEK  INDUSTET. 


••« 


sei^evcer^tn^Ihi!^  ^^°''"*^  "'^f""*'  ^"""^  ^^^^  "'^  manufacturer  to 
madeTt  Dos^rhte  ^^  '"f^"'*'"  ''"^'""^e'^'  ^he  increased  demand 
maae  it  possible  for  them  to  raise  prices  accordinelv  This  cnnspH 
niuch  greater  vanations  between  the  average  net  prices  cWed  W 
the  different  manufacturers  than  was  the  cafe  beforT  X  exlmpfe^ 
the  average  net  prices  charged  pubUshere  for  supercalendLed  n"  ne; 
on  contracts  made  m  the  second  half  of  1916  by  two  eastern  manu 
i".''^  n/'"'^r'"S  practicaUy  the  same  grade  of  paper  CeS5  23 
and  $6.04  per  100  pounds,  while  in  1915  tlie  prices  of  the  same  two 
companies  were  $3.51  and  $3.57  per  100  pounds     A  tWrd  ZteTn 

"9r6lrdl779t"f9lV'Tf  P^^  \?  P""A\^'^  ^^«  -'-d  htlf'o 
i,,;r  K  *    ^•^•'^^.'n  1915.     Thus,  in  the  second  hd   of  1916  the  differ- 

fw  DounTsTor^hiTtt*  *°*^  ^^^'^'  "^^^'^S^  '^«*  ^""t'-'^'^t  P'^^  per 
0^28  cente  companies  was  $1.35,  while  in  1915  it  was 

Taking  into  consideration  aU  the  eastern  manufacturers  from  whom 
prices  were  secured,  the  lowest  average  net  price  of  anTcomnanv  o^ 
contracts  with  publisher  for  supercSendered  paper  durin^tKc 

t"*^!  off. "if  ^?^^  ^'«^  *5-23  per  100  pounds,  while  the  WghestwimS' 
In  1914  the  lowest  was  $3.54  and  the  highest  was  $4.78  ThT  differ^ 
ence  between  the  lowest  and  highest  averse  net  prices  per  100  pounds 

Similar  "differences  existed  among  western  manufacturere  For 
example,  the  average  net  prices  charged  jobbers  for  machre-finish 
paper  on  contracts  made  in  the  seconS  ha&  of  1916  byXee  w5em 
^6  4fi  ^'yTr-  T^;?'o'?S  practically  the  same  qualit/of  papeT  we™ 
$6.46,  $7.41  and  $9.29  per  100  pounds,  while  in  1915  tfee  nrices 
no3,  V^A^r^  companies  were  $3.34,  $3.39,  and Msg  periOO 

second  haSf  STr'fh^'Tr  '^'  '°^^?*  '''"^  ^^""^  P^^^^  ^  'he 
it  w^  orOy  5  cents  compames  was  $2.83,  while  in  1915 

Taking  aU  the  western  manufacturers  from  whom  prices  were  se- 
cured, the  lowest,  average  net  price  of  any  company  on  contorts  wfth 
jobbery  for  machme-finish  paper  in  the  second  Wof  1916  was  $6  46 

^f2.°lrr'*l-^^^  ^^'  ^T'''  ^'^  »9-29-     In  1914  the  lowit  wt? 
$3.23  and  the  highest  was  $4.43.     Thus,  the  difference  betwZTho 
lowest  and  highest  average  net  prices  per  100  pounds  for  ajTcomna 
m^  m  the  second  half  of  1916  was  $2':83,  while  in  1914  iPwa^ZV 

DiscTimiTmtion  in  prices.— In  addition  to  disparity  in  nrices  as 
between  different  sellers,  there  were  also  discriminations  n  t^e  nric^ 
charged  bv  the  same  seller  to  different  classes  of  consumers  ^As  a 
general  rule,  pubhshers  were  charged  lower  prices  thanTobprintei^ 
or  conunerciat  users,  while  the  publishers  of  neriodicals  w^re  charged 
lower  prices  than  the  publishers'^of  books,  fhe  re^on  Sy  S 
for  this  discrimination  was  that  printers  and  commercid  userl  fouW 

SVp'ubhsTer'fe*:  their^customers  to  a  greXr  exTentTht 
coma  puDJisners.  As  between  pubhshers,  it  was  claimed  that  it  was 
e^ier  to  increase  the  prices  o'f  books  than  the  subscription^  Td 
advertising  rates  of  periodicals.  This  is  denied,  howev"r  b^som^ 
whn  t  ^''f  P"t>li*ers,  especiaUy  the  publish^rsT  schoolbooks 


BOOK-PAPER  INDUSTRY. 


59 


A  number  of  manufacturers,  jobbers,  and  publishers  gave  informa- 
tion as  to  the  discrimination  between  the  different  classes  of  con- 
sumers. A  large  eastern  manufacturer  stated  that  since  the  price 
advance  began  a  distinction  has  been  made  by  his  company  be- 
tween pubhshers  and  other  consumers.  The  price  to  pubhshers 
was  fixed  at  from  $5.50  to  $6  per  100  pounds,  and  to  others  from  $8 
to  $8.50  per  100  pounds.  This  was  done  in  the  company's  own 
interest,  as  it  was  believed  that  the  publishers  would,  to  a  large  extent, 
be  forced  out  of  business  if  compelled  to  pay  in  excess  of  $6  for  their 
paper.  Job  printers  and  others,  however,  could  readily  transfer  the 
increased  cost  to  their  customers. 

Another  manufacturer  stated  that  his  company  thought  it  was 
better  policy  to  favor  the  publishers  of  periodicals,  since  the  pub- 
hshers of  books  could  raise  the  prices  of  books  more  easily  than  the 
price  of  magazines  coidd  be  raised.  Besides,  periodicals  usually 
get  their  paper  under  contract  and  take  the  paper  regularly  through- 
out the  vear. 

A  jobber  with  several  branch  houses  and  the  exclusive  agency  of 
a  large  manufacturer  in  his  own  territory  stated  that  this  manu- 
facturer made  it  his  pohcy  to  charge  less  to  pubhshers  than  to  printers 
and  lithographers  on  account  of  tne  pubhshers'  inabihty  to  pass  the 
increased  cost  on  to  the  public. 

An  important  New  York  jobber  stated  that  manufacturers  were 
charging  much  lower  prices  to  magazine  publishers  than  to  book 
publishers,  since  the  latter  could  raise  the  prices  of  their  books 
while  the  former  could  not  raise  the  price  of  their  magazines. 

A  New  York  publisher  of  both  magazines  and  books  stated  that 
his  company  secured  the  paper  used  in  their  periodicals  at  a  lower 
price  than  that  used  in  miscellaneous  publications,  the  reason  being 
that  the  manufacturers  find  it  very  convenient  to  have  regidar 
consumers,  hke  magazines. 

A  New  York  book  pubhsher  stated  that  his  company  could  not 
get  the  terms  that  publishers  of  periodicals  obtained.  A  jobber  told 
him  this  situation  was  due  to  the  fact  that  the  demand  of  the  period- 
icals was  regular. 

A  book  publisher,  who  also  publishes  an  important  New  York 
weekly,  stated  that  paper  for  periodicals  could  be  secured  at  decidedly 
lower  prices  than  paper  used  for  miscellaneous  publications,  the 
reason  being  that  the  manufacturer  supplying  periodicals  has  a 
steady  patronage  and  can  keep  the  production  going  at  a  uniform 
rate.  He  was  told  by  representatives  of  a  large  manufacturer  that 
42  per  cent  of  the  production  of  the  company  was  sold  to  periodicals, 
the  remainder  going  for  miscellaneous  purposes.  The  paper  for  the 
periodicals  enabled  the  mills  to  keep  their  machines  moving  steadily, 
and  the  tonnage  for  miscellaneous  purposes  netted  the  company  a 
large  profit. 

A  New  York 
higher  price 

that  the  manufacturers  desire  as  customers  concerns  that  take  a 
regular  supply,  and  in  order  to  hold  this  class  of  trade  lower  prices 
are  quoted.  As  a  matter  of  fact,  this  publisher  stated,  book  pub- 
hshers were  no  more  able  to  advance  their  prices  than  were  the 
publishers  of  periodicals,  because  there  were  certain  book  pubhshers 


ork  book  publisher  stated  that  he  was  being  charged  a 
than  pubhshers  of  periodicals,  the  reason  assigned  being 


.,1 


60 


BOOK-PAPER  INDUSTBT. 


BOOK-PAPEE  INDTTSTET. 


61 


) 

) 

i 

i 


who  had  contracts  at  prices  low  enough  to  enable  them  to  keep  the 
price  of  the  oopular  novel  down  to  $1.50  or  even  $1.35. 

Ihe  pubhsher  of  two  magazines  in  New  York,  who  was  buying 
bs  paper  m  the  open  market  during  1916,  stated  that  the  manu? 

from  «l  fa'^T't"'  ^1^"  •'"^ipS  ^^^^^^  ^^^F'""^  ^  ^^  company 
from  $1  to  $1.50  per  100  pounds  as  compared  with  the  prevaiUn^ 
open-market  price.  I'lcvo.iuuj, 

r„ft,  ^"™^®'"  °^  5^^  »f  discriminations  in  prices  chained  by  one 
manufacturer  to  different  purchasers  are  given  in  the  following  table: 


Grade  and  purchaser. 


Machine  finish: 

Publishers — 

No.  1 

No.  2 

No.3 

Printers- 
No.  1 

No.  2 

No.3 

Commercial,  No.  l . 


Under 
contract. 


Tons. 
158 
183 
285 

112 

114 

232 

75 


Per  100 
pounds. 


Grade  and  purchaser. 


$7.52 
7.76 
7.76 

7.94 
&00 
7.94 
7.56 


Supercalendered: 
Publishers- 
No.  1 

No.2 

No.3 

No.4 

No.5 

No.6 

No.  7 

Printers— 

No.l 

No.2 

No.3 

No.4 

Commercial,  No.  1 . 


Under 

contract. 


Per  100 
pounds. 


Tons. 

60 

368 

1,550 

4,450 

7,500 

13,000 

13,400 

263 
266 
341 
543 
U75 


$7.76 
7.92 
5.82 
6.04 
5.79 
5.92 
5.92 

8.19 
8.25 
8.15 
8.19 
8.00 


1  Contract  for  this  tonnage  was  dated  October  30,  1916. 

fnr^Lw!!ff^T  ^^^^^^^  P"^^s  charged  to  different  customers 
formachme-fiiiish  paper  did  not  vary  greatly.  For  supercalendered 
however,  there  were  large  differences  between  the  prices  charged  to 
different  customers.  For  example,  pubhsher  No.  3  paid  $5.82  pe^ 
100  pounds  while  printer  No.  2  paiS  $8.25  per  100  pounds.  Pub^ 
hshers  Nos.  3  to  7,  inclusive,  purcfiase  the  paper  for  their  periodicals 
The  naanufacturer  stated  tfiat  it  was  the'^pohcy  of  his  cCpaTy  to 
charge  the  pubhshers  of  periodicals  much  less  during  1916  tlan 
other  customers,  otherwise  the  former  would  be  forced  out  of  busi- 
ness, while  other  customers  could  merely  shift  the  increased  price  of 
paper  onto  their  own  customers.  ^ 

Section  7.  SUMMABY. 

It  has  been  shown  in  the  preceding  sections  that  there  were  verv 
large  increases  m  the  prices  of  book  paper  during  1916  and  Ukewise 
m  jobbers'  gross  margins  of  profit.  ui^^wise 

In  this  section  the  extent  of  these  increases  is  summarized  and  the 
principal  causes  are  discussed. 

Increase  in  prices.—The  general  rise  in  the  prices  of  book  paper 
began  about  February,  1916,  and  continued  tWughout  the  y?ar 
In  January  and  February,   1917,   the  prices  remained  practically 

brslSfdeS^^^  ^^^^^'  ^'  ^^^^  ^^-  -'  ^-<i-^ 

The  mcrease  m  the  average  prices  of  white  book  paper  dehvered 
at  the  purchasers  sidewalk  on  contracts  made  by  23  manufacturers 


during  the  second  half  of  1916,  as  compared  with  1915,  were  85  per 
cent  on  machine  finish,  66  per  cent  on  sized  and  supercalendered, 
and  65  per  cent  on  coated.  For  the  contract  sales  of  21  jobbers  the 
increases  were  83  per  cent  on  machine  finish,  88  per  cent  on  sized 
and  supercalendered,  and  56  per  cent  on  coated.  Open-market 
prices  increased  to  an  even  greater  extent,  especially  on  machine 
ftnish  and  supercalendered  paper,  the  increase  in  many  cases  being 
over  100  per  cent. 

The  manufacturers  increased  prices  on  contracts  to  publishers  less 
than  to  jobbers.  For  example,  the  23  manufacturers,  from  whom 
prices  were  secured,  increased  the  prices  during  the  second  half  of 
1916,  as  compared  with  1915,  on  machine  finish  paper  77  per  cent  to 
publishers  and  93  per  cent  to  jobbers;  on  supercalendered,  64  per 
cent  to  publishers  and  82  per  cent  to  jobbers;  and  on  coated,  64  per 
cent  to  pubhshers  and  67  per  cent  to  jobbers. 

Causes  of  increase  in  prices. — The  rise  in  prices  was  preceded  and 
accompanied  by  an  increasing  demand.  This  heavy  demand  began 
during  the  fall  of  1915  and  reached  its  culmination  during  the  fall 
of  1916.  There  has  been  a  decided  slackening  up  of  demand  during 
1917.^  During  the  summer  and  fall  of  1916  many  of  the  mills  were 
from  several  weeks  to  two  or  three  months  behind  their  orders, 
although  producing  more  paper  than  ever  before.  During  the 
slack  season  of  1917  they  have  been  able  to  catch  up  with  their 
orders  and  accumulate  stocks. 

A  large  part  of  the  increase  in  demand  during  1916  was  due  to 
increased  consumption,  but  some  of  it  was  due  to  the  purchasing  of 
paper  for  storage  as  a  protection  against  the  possibility  of  future 
higher  prices  and  shortage  of  paper.  This  was  done  by  both  pub- 
lishers and  jobbers.  Individually,  the  increase  in  stocks  may  have 
been  comparatively  small,  but  collectively  it  must  have  been  quite 
large.  This  is  borne  out  by  the  statements  of  a  number  of  jobbers 
and  publishers. 

A  western  jobber  stated  that  there  was  a  tremendous  amount  of 
overbuying  in  1916,  both  by  jobbers  and  consumers.  This  was  true 
of  his  own  company  and  practically  all  the  important  jobbers  and 
consumers  with  whom  they  had  business  relations.  For  example,  a 
customer  who  ordered  a  large  consignment  of  paper  in  1916,  recently 
returned  a  car  of  the  paper  which  did  not  conform  to  specifications, 
and  expressed  a  desire  to  have  delivery  of  the  corrected  order  post- 
poned for  six  months  as  his  warehouse  was  so  full  that  he  had  no 
place  to  store  the  paper,  and  besides  would  have  no  use  for  it  for 
several  months.  Ihis  jobber  stated  (May,  1917)  that  consumers 
were  using  their  reserve  stocks  instead  of  placing  new  orders,  which 
resulted  in  a  softening  of  the  market.     (See  Exhibit  5,  pp.  115-118.) 

A  book  publisher  in  New  York  City  stated  in  February,  1917,  that 
his  company  formerly  carried  no  stock,  but  that  they  were  then 
carrying  about  $50,000  worth  of  paper  in  stock  as  a  protection. 

A  publisher  of  two  periodicals  in  Buffalo  stated  that  he  secured  and 
stored  enough  paper  in  1916  under  a  low-priced  contract  to  meet  his 
requirements  up  to  July,  1917. 

The  publisher  of  a  New  York  City  magazine  having  a  circulation 
of  about  150,000  copies  per  month  stated  early  in  January,  1917, 

iSee  Table  2  for  shipments  by  months. 


Ml 


62 


BOOK-PAPER  INDUSTRY. 


I. 


that  his  company  then  had  in  stock  suflBcient  paper  to  supply  all 

H^itin^^mV*^  "^"^'^  ^'  ?^7-    ^^  *^'^  P^P^"-  I»^d  been  secured 
during  1916  under  a  low-priced  contract,  which  did  not  limit  the 

tonnage  to  be  taken.     This  company  had  made  no  eflfort  to  secure  a 
new  contract  and  would  not  do  so  until  June  or  July.    This  publisher 
also  stated  that  he  thought  every  other  publishing  house  that  had 
been  able  to  get  the  paper  had  in  stock  a  much  larger  quantitv  of 
paper  than  was  customary.     TUs  had  undoubtedly  created  fictitious 
prices  in  1916,  but  wouldlower  prices  in  191 7,  because  these  publishers 
would  not  have  to  buy  for  some  time.     (See  exhibit  6,  pp.  1 19-122  ) 
Other  jobbers  and  publisiiers  gave  similar  information 
Manufacturers  took  advantage  of  the  increasing  demand   and  bv 
concerted  action  through  their  organization,  the  Bureau  of  Statistics 
and  in  other  ways,  were  able  to  create  a  panic  market,  which  forced 
prices  up  higher  than  they  would  have  gone  in  response  to  the  actual 
increase  in  consumption.'  ai-i-utu 

Increase  in  jobbers'  gross  margins.— Johhers'  gross  margins  of  profit 
on  contracts  made  during  the  second  half  of  1916  as  compared  with 
1915  increased  110  per  cent  on  machine-finish  paper,  230  per  cent 
on  supercalendered,  and  18  per  cent  on  coated.  On  open-market 
sales  for  direct  shipment  the  increase  in  jobbers'  average  gross  margins 
in  the  fourth  quarter  of  1916  over  the  third  quarter  of  1915  on  ma- 
chine finish  ranged  from  117  per  cent  in  the  Weveland  group  to  492 
per  cent  m  Boston;  on  supercalendered  from  29  per  cent  in  Boston 
to  524  per  cent  in  the  Phifadelphia  group;  and  on  coated  from  a  de- 

cenrfn^Chicfgo  ''°*  ""        ^'"«'°"**i  g™"P  ^  '^^  i^^crease  o7 Tu  per 

Ht.vlnTft^'^^'fr**^^***^*'  9ross^<^rgins.-TheTe  is  little  compe- 
tition between  the  jobbers  in  one  lai^e  city  and  those  in  another 
For  example.  New  York  obbere,  as  t  general  rule,  do  not  solidt 
business  in  Boston,  nor  Boston  jobber  fn  New  York.  In  expW- 
Uon  of  this  custom,  a  New  Yoric  jobber  stated  that  the  jobberin 
Boston  and  New  York  recognized  that  those  in  each  city  had  spen^ 
their  money  in  developing  their  own  territoiy  and  that  it  w^^nCt 
good  business  ethics  for  those  in  either  city  to  cut  into  the  oTher^s 

nltu  A  ^n  f  ^'^l'  )^l^^  true  generally  for^Philadelphia,  Baltimore 
aeveland  Detroit,  Chicago,  Cincinnati,  LouisviUe,  St.  Louis  etc' 
Some  jobber,  however  maintain  branches  in  two  or  more  of  these 

areTocated.  "'  °^  '*'"'^''  '""'''*  ''"''"*^^  wherever  they 

During  1916  there  was  practicaUy  no  competition  among  jobbers 
m  the  same  city  As  a  usual  thing,  consumers  could  not  luy  anT 
where  except  where  they  had  been  buying.  In  refusing  to  Lcep t 
the  orders  of  new  customers,  obbers  gener^y  stated  that  they  coufd 

Th/rt  T""  *^!I!  T^'^t  P^P"',*"  ^"PPly  their  regular  customr^ 
The^  result  was  that  jobbers  could  and  did  charge  any  price  th^y 
wished,  and  as  a  consequence  their  profits  increased  enormously."  -^ 

i  ?^I  ^  discussion  of  the  concerted  activities  of  manufactures  see  ChantPr  TV  ' 

^'Jorinstancesof  inability  of  publishers  to  buy  elsewhlyj^ii^S'rZnVeJ- regular  source,  ^  pp.5 


CHAPTER  III. 


COSTS,  SALES,  AND  PKOFITS  OF  MANXTFACTURE. 

Section  1.  INTBODUCTION. 

The  accountants  of  the  commission  obtained  directly  from  the 
books  of  21  principal  book  paper  manufacturing  companies  operating 
89  paper  mills  in  the  United  States,  their  costs,  sales,  and  profits 
for  the  years  1915  and  1916.  Similar  data  were  obtained  for  the  6 
coating  mills,  16  soda  pulp  mills,  and  9  sulphite  mills  operated  by 
these  companies.  The  costs  and  profits  of  10  companies  operating 
24  paper  mills  were  also  obtained  for  the  first  quarter  of  1917. 

Considerable  variation  was  found  in  the  methods  of  keeping 
costs  employed  by  the  different  companies  so  that  considerable 
revision  was  necessary  to  put  them  on  a  uniform  basis  and  bring 
them  into  line  with  the  best  accoimting  practice. 

It  was  foimd  that  costs  were  kept  for  the  whole  production  of 
each  miU  regardless  of  what  the  mill  made,  there  being  no  attempt 
to  segregate  costs  according  to  the  grade  of  paper  manufactured. 
Hence  the  cost  figures  obtained  by  the  commission  include  some 
grades  of  paper  that  would  not  be  classed  as  book  paper.  Such 
other  grades,  however,  are  not  of  sufficient  quantity  or  sufficiently 
different  in  character  or  cost  to  materially  impair  the  value  of  the 
figures.  Furthermore,  the  proportion  of  these  other  grades  to  the 
whole  is  about  the  same  for  the  years  1915  and  1916,  so  that  the 
comparison  of  the  two  years  is  not  greatly  affected. 

Items  eliminated  from  costs. — With  one  exception  all  of  the  book 
paper  companies  making  their  own  soda  pulp  and  sulphite  charged 
these  raw  materials  into  paper  costs  at  a  profit.  This  profit  repre- 
sents the  difference  between  the  cost  of  production  of  the  pulp  and 
the  market  price,  or  an  arbitrary  figure  based  on  market  price,  at 
which  they  were  charged  into  paper  costs.  In  order  to  arrive  at  the 
true  cost  of  making  paper  it  was  necessary  to  eliminate  such  transfer 
profits. 

Only  one  or  two  companies  were  found  which  were  using  pulp 
wood  cut  from  their  own  lands  in  making  soda  pulp  or  sulphite  and 
this  wood  was  found  to  be  charged  in  at  a  fair  figure  so  that  no  read- 
justment was  necessarv  in  wood  costs. 

One  company  was  found  which  was  charging  soda  pulp  and  sul- 
phite purchased  under  favorable  conditions  into  the  cost  of  paper 
at  the  market  price  which  was  much  higher  than  the  price  paid. 
The  costs  of  this  company  were  revised  so  as  to  eliminate  such 
profits. 

63 


*l 


64 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


65 


Most  of  the  book  paper  companies  treat  bond  interest  as  a  cost 
item.  In  arriving  at  the  true  cost  of  manufacture  the  commission 
has  eliminated  bond  interest  and  other  forms  of  interest  from  the 
cost  as  shown  by  the  books  of  the  book  paper  companies. 

Readjustment  of  depreciation. — The  practice  of  book-paper  com- 
panies with  respect  to  depreciation  varies  considerably.  Some  do 
not  treat  depreciation  as  a  cost  item,  but  charge  off  to  profit  and  loss 
a  lump  sum,  usually  whatever  they  can  afford,  at  the  end  of  the  year. 
Other  companies  make  a  Uberal  charge  for  depreciation  on  their  cost 
sheets,  and  where  they  produce  theu*  own  soda  pulp  and  sulphite 
distribute  the  depreciation  back  to  these  items.  This  practice  has 
been  followed  by  the  commission. 

In  order  to  arrive  at  a  fair  charge  for  depreciation  the  commission 
has  substituted  computations  of  its  own  for  those  shown  by  the  books 
of  the  companies.  It  was  found  that  several  of  the  best  managed 
mills  allowed  about  5  per  cent  upon  their  investment  for  deprecia- 
tion, which  figure  has  been  adopted  by  the  commission. 

Figured  on  a  fair  cost  of  investment  per  ton  of  output  this  rate  of 
depreciation  amounts  to  the  following  for  1915  and  1916: 

Depreciation  per  ton  of  product  allowed  by  the  commission. 


Book-pax)er  mills 

Coating  mills 

Sulphite  mills. . . 
Soda  mills 


$1.75 
1.50 
1.25 
1.25 


The  depreciation  used  for  the  first  quarter  of  1917  was  the  same 
as  for  the  year  1916. 

The  smaller  amount  of  depreciation  per  ton  of  product  in  1916,  as 
compared  with  1915,  is  due  to  the  fact  that  production  increased  on 
the  average  about  20  per  cent.  The  total  depreciation  computed  by 
the  commission  for  all  the  mills  whose  costs  were  taken  was  about 
$30,000  more  in  1915  than  the  depreciation  charged  off  by  the  com- 
panies and  about  $86,000  less  in  1916,  on  a  total  of  over  $2,000,000. 
The  latter  being  a  prosperous  year  some  companies  charged  off  de- 
preciation more  hberally  than  they  did  in  the  preceding  year. 

The  costs  at  which  soda  pulp  and  sulphite  were  charged  into  paper 
by  the  commission  and  paper  into  coated  paper  include  the  above 
depreciation  charges. 

Miscellaneous  adjustments. — The  profit-and-loss  statements  of  the 
book-paper  manufacturers  as  a  rule  contained  a  number  of  items 
which  the  commission  has  either  debited  or  credited  to  costs,  such 
as  bonuses  to  employees,  receipts  from  sales  of  screenings,  waste 
materials,  by-products,  etc.  In  some  cases  general  administrative 
expenses  were  also  treated  in  this  manner.  Bad  debts  were  charged 
to  selling  expenses  where  not  already  handled  in  this  manner. 


Section  2.  BOOK-PAPER  MILL  COSTS,  1915  AND  1916. 

The  itemized  costs  of  39  princpal  book-paper  mills  producing 
more  than  80  per  cent  of  the  total  output  of  book  paper  in  the  United 
States  were  obtained  by  the  commission  and  have  been  averaged  for 
the  years  1915  and  1916.  As  stated  above,  most  of  these  mills  pro- 
duce various  other  grades  of  paper  besides  those  classed  as  book 
paper,  but  the  inclusion  of  these  grades  in  the  costs  does  not  materi- 
ally impair  their  value,  e^  pecially  for  comparative  purposes. 

Table  19  below  shows  the  average  costs  of  the  39  book-paper  miUs 
by  items  for  1915  and  1916,  together  with  the  increase  or  decrease 
per  ton  and  percentage  of  increase  or  decrease  in  the  cost  of  different 
items.  These  figures  include  machine  finish  and  supercalendered 
paper,  but  exclude  coated  paper,  which  is  finished  in  mills  especially 
adapted  to  this  process.  The  average  costs  of  coated  paper  are  given 
in  tne  following  section.     (See  p.  70.) 

Table  19. — Average  cost  of  production  per  ton  of  paper  for  39  principal  hook-paper 

milh.  1915  and  1916. 


1915 

1916 

Increase, 

1916  over 

1915. 

Per  cent 

of 
increase. 

Tons  produced 

644,902 

772,532 

127,630 

19.79 

Stock: 

Soda  pulp 

113. 08 

17.01 

5.79 

2.28 

.68 

.48 

.24 

1.12 

$14. 30 

18.81 

7.65 

2.21 

.84 

.72 

.48 

1.61 

$1.22 

1.80 

1.86 

•.07 

.16 

.24 

.24 

.49 

9.33 

Sulphite 

Waste  paper 

10.58 
32.12 

FUlers 

Alum 

13.07 
23.53 

Rosin 

50.00 

Color 

100.00 

Miscellaneous 

43.75 

Total 

40.68 

46.62 

5.94 

14.60 

Conversion: 

Labor 

8.68 
2.88 
1.59 
1.31 
1.42 
1.29 

9.63 
3.25 
1.56 
1.43 
1.58 
1.52 

.95 
.37 
1.03 
.12 
.16 
.23 

10.94 

Fuel 

12.85 

Repairs 

11.89 

Wires,  felts,  beltinp,  and  lubricants 

9.16 

Packing  and  shipping 

11.27 

M'^i'^llfuipnn'i    ...                                                                . . . . 

1          17.83 

Total 

17.17 

18.97 

1.80 

10.48 

General  expense: 

.69 
1.70 

.73 
1.80 

.04, 
.10 

5.80 

AdministTativft 

5.88 

Total 

2.39 

2.53 

.14 

5.86 

Factory  cost,  without  depreciation 

60.24 
2.00 

68. 12 
1.75 

7.88 
».25 

13.08 

Depreciation 

112.50 

Total  cost 

62.24 

69.87 

7.63 

i         12. 26 

1 

1  Decrease. 

The  table  shows  that  the  average  cost  of  production  of  the  39 
book-paper  mills  rose  from  $62.24  per  ton  in  1915  to  $69.87  per  ton 
in  1916,  an  increase  of  $7.63  per  ton,  or  12.26  per  cent.  Of  this 
increase,  $5.94  was  attributable  to  increases  in  stock  items  and  $1.80 
to  increases  in  conversion  items.  The  only  item  of  stock  which 
showed  a  decline  was  fiUers  and  the  only  item  of  conversion  showing  a 
decline  was  repairs.  The  largest  increases  in  percentages,  as  a  riue, 
were  in  such  items  as  color  and  rosin,  but  the  actual  increases  in 

12159'— S.  Doc.  79, 65-1 5 


^ 


m 


u 


66 


BOOK-PAPEE  INDUSTEY. 


dollars  for  these  items  were  very  small  since  they  constitute  a  very 

small  proportion  oi  the  total  cost.  ^ 

The  increase  m  C03ts  in  1916  occurred  largely  in  the  latter  half  of 

the  year     When  averaged  with  the  lower  costs  for  the  first  h^  of 

/^!/f  i-  H'T^^^  ^""^  ^>^  ^^°^^  y^*""  1916  ^^  not  especiaJly  large. 

Costs  for  first  quarter  of  1917. -Costs  were  obtained  from  10  com^ 
panics  operating  24  paper  miUs  for  the  first  quarter  of  1917  The 
fnTlf  :^d  M^^^fn  .  ^««,f  0-37  per  ton  i\l915,  $65.96  per  ton 
i  .1,  '/"'I  '^^-^  1  P^"^  t*"^  '"  the  first  quarter  of  1917.  The  increasp 
for  the  first  quarter  of  1917  over  igisVas  $22.94  per  ton  or  38  per 
TrL,  j{:/°"trast  as  shown  on  page  78,  profits  Eer  ton  fncreaFed 

-^^f  T^n  "'"'^  ^^i'**?*  ^?'°"'  !"^-3'  to  «37.21,  or  aWt  261  per  cent 
The  following  tabulation  shows  the  low,  high,  and  average  c^te 
per  ton  of  paper  of  the  24  mills  for  1915,  1916:  and  the  tet^quarte^ 


Year.                                              ^ 

Low. 

High. 

Average. 

iyi-o  ................ 

1916 

1917  (first  quarter)'."!.'.".';;;:;;;;::;:;;:;;; 

$50.34 
55.11 
62.19 

178.59 

92.21 

141. 41 

$60.37 
65.96 

83.31 

Percentage  of  cost~The  percentage  of  the  total  cost  of  the  39 
book-paper  miUs  attributable  to  the%articular  items  of  expense  hi 
1915  and  1916  is  shown  by  Table  20  followmg.  expense  m 

Table  20.~Percentage  of  total  cost  of  producmg  paper  of  39  pnndpal  book-paper  mills 

attributable  to  particular  iterns,  1915  and  1916.  ^  ^ 


Tons  produced . 


Stock: 

Soda  pulp 

Sulphite 

Waste  paper.. 
FlUers.. .!:... 

Alum 

Rosin 

Color 

Miscellaneous. 


1915 


Total. 


Conversion: 

FS^r-.:::::: 

T>„ '• 

Repairs 

Wires,  felts,  belting,  and  fiibrican'ts' 

Packing  and  shipping 

Miscellaneous 


644,902 

Per  cent. 

21.02 

27.33 

9.30 

3.66 

1.09 

.77 

.39 

1.80 


1916 


772,532 

Per  cent. 

20.47 

26.92 

10.-95 

3.16 

1.20 

1.03 

.69 

2.31 


Increase, 

1916  over 

1915. 


127,630 


Total. 


65.36 


13.95 
4.63 
2.55 
2.10 
2.28 
2.08 


66.73 


Per  cent. 

»0.55 

».41 

1.65 

1.50 

.11 

.26 

.30 

.51 


1.37 


13.78 
4.65 
2.23 
2.05 
2.26 
2.18 


1.17 
.02 
1.32 
1.05 
1.02 
.10 


General  expense: 

Taxes  and  insurance. 
Administrative ; 


Total. 


Factory  cost,  without  depreciation 
Depreciation 


27.59 


1.11 
2.73 


Total  cost. 


3.84 

96.79 
3.21 

100.00 


27.15 


L04 
2.58 


.44 


1.07 
1.15, 


P^CTQftS^ 


3.62 

97.60 
a50 

100.00 


U.H  Vljirmpa 


1.22 

.7l 
1.71 


BOOK-PAPER  INDUSTRY. 


67 


The  percentage  of  the  total  cost  attributable  to  particular  items 
did  not  vary  much  in  the  two  years.  Stock  items  represent  about 
66  per  cent  of  the  total  cost  and  conversion  items  about  27  per  cent. 
The  remaining  7  per  cent  is  covered  by  general  expense  and  deprecia- 
tion. The  most  important  items  of  stock  are  soda  pulp,  sulphite, 
and  waste  paper.  Together  they  represent  more  than  half  of  the 
total  cost  of  making  paper.  The  most  important  conversion  item  is 
labor,  which  represents  nearly  14  per  cent  of  the  total  cost. 

Paper  costs  hy  groups  of  mills. — Considerable  variation  exists  in 
the  costs  of  the  39  book-paper  mills  due  to  differences  in  the  quality 
and  specifications  of  paper  made,  to  the  efTiciency  of  management, 
and  especially  in  1916  to  whether  they  made  or  did  not  make  their 
own  soda  pulp  and  sulphite. 

Table  21  following  groups  the  39  mills  into  9  classes  according  to 
costs  and  shows  for  each  class  the  number  of  mills  included,  tons 
produced,  percentage  of  the  total  tonnage  of  the  39  mills,  and  average 
cost  per  ton : 

Table  21. — Cost  of  production  of  paper  in  S9  principal  book-paper  mills  arranged  by 

groups  according  to  cost  per  ton,  1915  and  1916. 


Group. 


I.  $50  and  less  than  $.55 

II.  155  and  less  than  $G0 

III.  $60  and  less  than  $65... 

IV.  $65  and  less  than  $70. . . 
v.  $70  and  less  than  $75 — 

VI.  $75  and  less  than  $80. . . 

VII.  $80  and  less  than  $85. . 

VIII.  $85  and  less  than  $90. 

IX.  $90  and  over 


1915 


Num- 
ber of 
mills. 


Tons 
pro- 
duced. 


Total. 


5 
4 
12 
8 
4 
4 
2 


116, 718 
147,094 
176,527 
85, 112 
57,038 
50,971 
11,442 


Per   'Average 
cent  of  j     cost 
total.  { per  ton. 


I 


39     644,902 


18.10 

22.81 

27.37 

13.20 

8.85 

7.90 

1.77 


100.00 


$52.19 
57.03 
62.05 
67.51 
71.85 
77.11 
81.51 


1916 


Num- 
ber of 
mills. 


62.24 


39 


Tons        Per   |  Average 
pro-     cent  of  i     cost 
duced.     total.  '  per  ton. 


I 


210,639 

136, 463 

35,838 

128,040 

112,919 

92,380 

33,732 

22,521 


27.27 

17.66 

4.64 

16.57 

14.62 

11.96 

4.37 

2.91 


$.57.38 
63.92 
67.45 
72.58 
77.88 
81.77 
87.62 
95.57 


772.532   100.00 


69.87 


The  table  shows  that  in  1915,  29  mills  producing  more  than  81 
per  cent  of  the  total  tonnage  had  a  cost  below  $70  per  ton,  while  in 

1916,  29  mills  producing  about  81  per  cent  of  the  tonnage  had  a  cost 
less  than  $80  per  ton.  In  1915  none  of  the  mills  had  a  cost  above 
$85  a  ton,  while  in  1916  the  costs  per  ton  of  six  mills  were  above 
this  figure. 

Of  the  24  mills  whose  costs  were  obtained  for  the  first  quarter  of 

1917,  2  would  come  in  Group  III,  3  in  Group  IV,  2  in  Group  V,  none 
in  Group  VI,  2  in  Group  VII,  none  in  Group  VIII,  and  15  in  Group 
IX.  Of  these  15 mills.  Shad  a  cost  between  $90  and  $100,  5  between 
$100  and  $111,  and  2  a  cost  of  more  than  $130  per  ton. 


^f 


m 


M\ 


rW 


■'i 


68 


book-papp:r  industry. 


BOOK-PAPER  INDUSTRY. 


69 


Paper  costs  hy  indmidual  mills. — The  variation  in  the  important 
Items  of  cost  of  the  39  mills  is  shown  by  Table  22  which  gives  the 
figures  by  mills  for  1915  and  1916.  The  mills  are  arranged  according 
to  cost,  beginning  with  the  lowest,  so  that  the  same  miU  may  have  a 
different  number  in  1916  than  in  1915. 


Table  22.— 


Cost  of  prodiution  per  ton  of  paper  of  39  principal  book-paper  mills,  by 

mills,  1915  and  1916. 


191.5. 


Mill  nural)er. 


Stock. 


Soda 
pulp. 


1 

1 

!«15. 37 

2 

13. 24 

3 

'    6.82 

4 

25.68 

5 

23.62 

6 

13.34 

7 

18.43 

8 

17.20 

9 

5.78 

10 

11 

13.27 

12 

13 

6.77 
12.16 
35.67 
32.88 
5.72 
4.80 
2S.73 
20.91 
16.91 

14 

15 

16 

17 

IS 

19 

30 1 

21 :::::;:' 

22 

23 

12.11 

12.90 

16.84 

1.27 

4.98 

24 

25 

26 ' 

27 

Sul- 
phite. 


Waste 
paper. 


,f  13. 66 
19. 32 
21.00 
7.51 
8.74 
16.97 
15.37 

18.29 ; 

19.86  i 
2.21  I 

?2.69 ; 

22.40  ! 

14.06 

19.18 


$2.41 
'5.' 74 


4.25 
.23 


Mis- 
cella- 
neous. 


29 

?>\... ...... 

^2......... 

33 

34 

35 

36 

37 

38 

39 


16.59 

8.78 

'  4.  oe' 

18.59 
15.27 
14.20 
12.96 
9.00 
11.38 
11.62 


2.37 
16.59 
11.48 

6.  66 
11.36 
10. 35 
21.49 
17.22 
29.52 
13.05 
16.66 
12.46 
28.14 
12. 69 
17.95 
21.67 
25.  75 
14.67 
17.08 
15.04 
14.76 
37. 91 
25.14 
17.78 


4.19 

26.10 

.12 

9.70 
14.27 

7.77 

2.15 

2.45 
14. 40 
17.67 

2.72 
10.44 
13.26 

9.94 


.05 

11.70 

20.26 

19.84 

10.61 

10.44 

9.19 

9.75 

13.18 

.36 

10.98 

13.06 

9.13 

1.71 

3.60 

4.43 


Average 13.OS     17.01 


5.79 


$3.55 
3.65 
2.66 
3.43 
3.13 
3.44 
4.11 
.3.85 
7.76 
5.33 
.3.61 


Conversion. 


Total.  1  Labor. 


56 
99 


3.98 


23 

76 

88 


4.71 
.3.98 
3.96 
4.79 
9.05 
4.81 
5.35 
4.62 
5.74 
5.68 
3.88 
.5.68 
6.75 
8.87 
4.77 
&61 
5.47 
4.91 
7.94 
4.32 
8.24 
6.20 


4.80 


36.21 

36.22 

36.62 

35.49 

38.00 

38.14 

.39. 34 

37.59 

33.64 

39.69 

37.66 

39.09 

43.09 

42.  a5 

41.46 

42.59 

38.66 

42.09 

46.67 

45. 31 

40.48 

34.14 

47.82 

46.21 

43.93 

42.96 

42.63 

45.40 

42.67 

40.29 

47.  76 

42.23 

48.80 

47.21 

44.79 

52.94 

48.36 

40.03 


$6.38 
5.84 
5.32 
6.07 
7.65 
7.86 
7.77 
7.22 
7.20 
12.70 
9.08 
7.74 
12.26 
6.21 
9.44 
10.80 
8.31 
12.04 
9.26 
6.  .32 
8.11 
10.46 
17.6.5 
7.09 
8,79 
10.81 
11.39 
11.40 
11.73 
13.76 
15.24 
8.89 
12.22 
11.76 
11.96 
6.67 
8.98 
12.29 
19.66 


Mis- 
cella- 
neous. 


$5.11 
5.41 


90 
39 
80 


6.05 
7.53 

6.29 
8.83 
9.72 
8.28 
9.30 
7.02 
7.91 
7.23 
6.92 
&02 
6.92 
8.18 
6.98 
7.14 
10.66 
8.51 
7.16 
8.01 
8.66 
8.24 
9.  .39 
7.  ,52 
10.31 
10.80 
10.32 
14.06 
10. 34 
12.10 
19.19 
10.77 
12.24 
16.44 


Total. 


$11. 
11. 
11. 


49 
25 
22 


40.68       8.68  1     8.49 


13. 46 

15.45 

13.91 

15.30 

13.51 

16.03 

22.42 

17.36 

17.04 

19.28 

14.12 

16.67 

17.72 

16.33 

18.96 

17.44 

13.30 

15. 25 

21.12 

26.16  , 

14.25 

16.80  t 

19.47 

19.63 

20.79 

19.25 

24.07 

26.04 

19.21 

26.28 

22.10 

24.06 

25.86 

19.75 

24.53 

36.10 


17.17 


General 
expense, 
including 
depreci- 
ation. 


$3.86 
3.75 


4. 
3. 
3. 
4. 
3. 


,62 
.91 
75 
10 
,51 
4.17 
5.32 
4.33 
3.62 
6.10 
3.47 
4.91 
4.03 
4.09 
4.44 
5.79 
4.02 
4.17 
4.08 
4.56 
6.03 
4.79 
4.23 
4.06 
5.45 
5.26 
4.11 
4.30 
5.19 
4.77 
3.40 
26 
16 
,20 
,90 
&18 
6.24 


4. 
4. 
7. 
5. 


4.39 


Total 
cost. 


$50.34 
51.21 
52.06 
5.3.99 
54.69 
56.01 
56.95 
57.02 
58.94 
60.39 
60.67 
60.80 
61.84 
62.12 
62. 75 
63.27 
63.36 
63.41 
63.5.5 
64.14 
64.64 
66.16 
66. 3;^ 
66.86 
67.24 
67.46 
6&(M 
68.68 
68.76 
71.04 
71. 52 
71.74 
71.91 
75. 16 
75.4:i 
77.8.5 
78.59 
81.07 
82.37 


62.24 


Table  22.— Cost  of  production  per  ton  of  paper  of  39  principal  hook-paper  mills,  by 

mills,  1915  and  1916 — Continued. 


1916. 


Stock. 

Conversion. 

General 
expense, 
including 
depreci- 
ation. 

Mill  number. 

Soda 
pulp. 

Sul- 
phite. 

Waste 
paper. 

Mis- 
cella- 
neous. 

Total. 

Labor. 

Mis- 
cella- 
neous. 

Total. 

Total 
cost. 

1 

$28.88 
16.56 
13.00 
16.86 
19.51 
24.92 
14.95 
32.36 
3L44 
18.26 

$4.74 
15.34 
23.77 
18.58 
13.66 
9.93 
19.01 

"5.' 79' 
19.56 
20.83 
25.86 
28.66 
10.90 
14.92 
12.29 
28.35 
13.54 
26.89 
27.24 
25.90 
20.38 
18.22 
1.62 
19.11 
14.03 
18.01 
17.80 
17.32 
20.80 
15.31 
39. 95 
19. 16 

'$2.' 58* 

""'.'os' 
"efos" 

1.12 

.61 

.06 

8.80 

1L52 

•     .39 

11.84 

22.75 

15.91 

8.47 

3.32 

9.64 

16.33 

14.06 

19.18 

15.18 

42.64 

23.25 

.33 

24.33 

14.35 

14.51 

25.07 

17.88 

.84 

13.42 

$3.81 
3.73 
3.41 
3.55 
4.65 
3.53 
3.66 
7.02 
4.88 
3.69 
9.53 
3.56 
6.46 
4.21 
5.57 
5.66 
9.33 
4.60 
4.33 
4.60 
8.18 

$37.43 
38.21 
40.18 
38.99 
37.90 
38.38 
43.67 
40.50 
42.72 
4L57 
39.16 
48.89 
49.17 
53.47 
48.06 
54.64 
5L25 
49.22 
5L56 
48.17 
48.14 

$6.72 

7.08 

6.31 

7.55 

9.52 

7.86 

7.76 

10.75 

n.44 

10.72 

7.93 

6.42 

8.09 

6.23 

n.5i 

7.99 

7.29 

n.45 

7.91 

n.8i 

13,07 
12.68 
1L06 
12.87 
n.96 
13.61 
9.47 
9.20 
13.23 
12.77 
n.53 
9.90 
n.27 
14.05 
14.04 
17.08 
16.04 
10.59 
n.52 

$6.33 

6.01 

5.21 

7.18 

7.99 

7.85 

6.49 

7.78 

6.60 

9.14 

12.00 

7.29 

8.48 

7.46 

7.04 

7.50 

10.58 

9.61 

9.30 

10.34 

10.35 

12.48 

10.62 

10.87 

9.78 

13.57 

9.95 

8.75 

8.34 

10.42 

10.58 

1L82 

1L06 

10.07 

13.32 

18.22 

14.50 

n.53 

19.58 

$13. 05 
13.09 
n.52 
14.73 
17.51 
15.71 
14.25 
18.53 
18.04 
19.86 
19.93 
13.71 
16.57 
13.69 
18.55 
15.49 
17.87 
2L06 
17.21 
22.15 
23.42 
25.16 
2L68 
23.74 
2L74 
27.18 
19.42 
17.95 
2L57 
23.19 
22.11 
2L72 
22.33 
24.12 
27.36 
35.30 
30.54 
22.12 
3L10 

$4.63 
3.97 
4.11 
4.65 
3.11 
4.46 
4.57 
3.60 
3.51 
3.33 
6.80 
4.85 
4.37 
3.40 
5.39 
3.56 
4.69 
3.63 
5.48 
4.50 
3.78 
4.26 
3.36 
3.88 
3.05 
3.02 
3.38 
3.47 
3.69 
3.69 
3.51 
4.72 
3.42 
5.18 
7.75 
6.57 

$55.11 

2 

55.27 

3 

55.81 

4 

58.37 

5 

58.52 

6 

58.55 

?: 

8 

9 

10 

11  

62.49 
62.63 
64.27 
64.76 
64.89 

12 

13 

7.95 
13.66 
26.52 

4.82 
20.78 

5.10 
27.76 
10.70 

67.45 
70.11 

14 

15 

16 

17 

18 

19 

20 

70.56 
72.00 
73.69 
73.81 
73.91 
74.25 
74.82 

21 

75.34 

22 

6.46  !  46.02 

75.44 

23 

10.59 

6.81 
5.53 
5.03 
12.86 
6.07 
4.84 
6.33 
6.94 
5.36 
6.17 
6.66 
8.04 
9.92 
5.99 
6.03 
5.26 
8.92 

50.80 
49. 79 
52.81 
48.05 
55.55 
57.00 
54.45 
54.31 
56.11 
55.71 
57.41 
57.27 
53.17 
46.60 
53.64 
61.23 
58.74 

75.84 

24 

77.41 

25 

26 

5.42 
20.83 

7.14 
20.01 
16.29 

1.50 
17.56 

8.75 

iai7 

6.94 
14.36 
17.73 
23. 21 

5.12 
15.79 

77.60 
78.25 

27 

28 

78. 35 
78.42 

29 

30 

31 

32 

33 

79.71 
8L19 
8L73 
82.15 
83.16 

34 

15. 79     26. 50 

86.  .57 

35 

26.77 
19.31 
24.40 
29.06 
2L70 

2.12 
3.57 

"21*79" 
12.33 

88.28 

36 

88.47 

37 

5.40     89.58 

38 

39 

8.  86  !  92. 21 
7. 48  1  97. 32 

A  veraee 

14.30 

1&81 

7.65 

5.86 

46.62 

9.63 

9.34 

18.97 

4.28    69.87 

The  wide  variations  in  the  costs  of  soda  pulp,  sulphite,  and  waste 
paper,  shown  by  the  table,  are  due  mainly  to  the  relative  propor- 
tions of  each  used  and  also  to  the  costs  to  the  manufacturers  of 
producing  or  buying  these  materials.  The  variation  in  the  labor 
costs  is  due  to  considerable  extent  to  the  grade  of  book  paper  made. 
More  labor  is  required  to  make  supercalendered  paper  than  to  make 
machine  finish. 


;i 


j» 


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!»'< 


70 


BOOK-PAPER    INDUSTRY. 


Section  3.  COATED-PAPER  MILL  COSTS,  1916  AND  1916. 


»ix  of  the  book-paper  companies  whose  costs  were  obtained  oper- 
ated one  coating  mill  each.  The  costs  of  these  six  coating  mUls  were  ' 
kept  separately  from  the  costs  of  their  other  paper  mills  and  have 
been  used  to  compute  an  average  cost  of  production  for  coated  paper 
for  the  years  1915  and  1916.  Table  23  shows  the  average-costsbv 
items  together  with  the  mcrease  and  percentage  of  increase  of  1916 
over  1915.  The  machine-finish  paper  used  for  coating  is  charged 
into  the  coated  paper  at  cost,  including  depreciation. 

Table  2S.-Average  cost  of  production   per   ton   of  coated  paper  for  6  coatina  mills 

1915  and  1916.  ' 


Tons  produced. 


Stock: 

Paper 

Clay 

Casein 

Satin  white... 
Miscellaneous. 


1915 


1916 


83,024       100,920 


Increase, 

1910  over 

1915. 


17,896 


Total. 


Conversion: 

Labor 

Fuel '.'.'.'."'.. 

Repairs .' 

J'.eltmg  and  lubricants.! 
Packing  and  shipping. . . 
liiscellaneous 


$42.54 
3.26 
7.56 
1.92 
2.59 


57.87 


$53.58 
3.25 
9.68 
1.73 
4.77 


73.01 


Total. 


9.75 
2.01 
1.43 

.12 
2.72 

.31 


11.63 
2.06 
1.52 

.12 
3.01 

.25 


$11.04 
'.01 
2.12 
1.19 
2.18 


Per  cent 

of 
increase. 


21.56 


15.14 


1.88 
.05 
.09 


25.95 
».31 

28.04 
»9.90 
84.17 


26.16 


19.28 
2.49 
6.29 


.29 

J.  06 


16.34 


General  expense: 

Taxes  and  insurance. 
Administrative 


18.59 


2.26 


Total. 


.49 
1.54 


.53 
2.02 


2.03 


2.55 


Factory  cost  without  depreciation 
Depreciation 


76.24 
1.75 


94.15 
1.60 


Total  cost. 


10.66 
19.35 

13.77 


.04 

.48 


.52 


17.91 
1.25 


8.16 
31.17 


25.62 


23.49 
14.29 


r7.99 


95.65 


17.66 


'  Decrease. 


22.64 


As  shown  by  the  table,  the  average  cost  of  producing  coated 
paper  of  the^six  mills  rose  from  $77.99  per  ton  in  1915  to  $95  65  an 
mcrease  of  $17.66  per  ton,  or  22.64  per  cent.  The  l^est  increase 
TlT O^nir't  "^^'^^'-P^'^  P^Per  uled.  This  alone  amounted^ 
labor  $r88rton'^'''  increased  $2.12  a  ton  in  cost,  and  conversion 

Percentage  ofcost-The  percentage  of  the  total  cost  of  producing 
coated  paper  attributable  to  particular  items  is  sho^v^l  by  Table  2/ 
foUowmg,  for  the  years  1915  and  1916;  ' 


BOOK-PAPER  INDUSTRY. 


71 


Table  24, — Percentage  of  total  cost  of  producing  coated  paper  of  6  mills  attributable  to 

particular  iteins,  1915  and  1916. 


1915 

1916 

Increase, 

1916  over 

1915. 

Tons  nroduced 

83,024 

100,920 

17,896 

Stock: 

Paper 

Per  cent. 
54.55 
4.18 
9.69 
2.46 
3.32 

Per  cent. 

56.02 
3.40 

10.12 
1.81 
4.98 

Per  cent. 
1.47 

Clay 

1.78 

Casein 

.43 

Satin  white 

».65 

Miscellaneous 

1.66 

Total 

74.20 

76.33 

2.13 

Conversion: 

Labor 

12.50 
2.58 
1.83 

.15 
3.49 

.40 

12. 10 
2.15 
1.59 

.13 
3.15 

.26 

1.31 

Fuel 

1.43 

Repairs .           ..                     

1.21 

Beltinof  and  lubricants 

1.02 

Packin?  and  shipping 

Miscellaneous 

1.34 
1.14 

Total 

20.95 

19.44 

11.51 

General  expense: 

Taxes  and  insurance 

.63 
1.98 

.55 
2.11 

1.08 

Admini^l^^rHtivfl                                                                      

.13 

Total 

2.61  1 

2.66 

.05 

Factory  cost,  without  depreciation 

97.76 
2.24 

98.43 
1.57 

.67 

Depreciation 

1.67 

Total  cost 

100.00 

100.00 

0.00 

1  Decrease. 


The  percentage  of  total  cost  attributable  to  paper  was  higher  in 
1916  than  in  1915,  while  for  clay,  satin  white,  and  all  of  the  conver- 
sion items  the  percentages  were  lower. 

Machine-finish  paper  represents  more  than  half  of  the  total  cost 
of  making  coated  paper.  Other  iteins  bring  the  stock  cost  up  to 
about  75  per  cent  of  the  total  cost.  Conversion  items  represent 
about  20  per  cent  of  the  total  cost,  of  which  labor  alone  represents 
more  than  12  per  cent.  General  expenses  and  depreciation  represent 
about  5  per  cent  of  the  total  costs. 

Costs  of  individvxil  coating  mills. — The  total  costs  of  production  for 
each  of  the  six  coating  mills  for  1915  and  1916  are  shown  in  the  tabu- 
lation below.  Coating-mill  costs  were  not  obtained  for  the  first 
quarter  of  1917.     The  mills  are  arranged  in  order  of  costs  for  1916. 


Mill  No. 

1915 

1916 

Increase, 

1916  over 

1915. 

Per  cent 

of 
increase. 

1 

$70.36 
86.07 
80.32 
72.64 
81.96 
83.13 

$87.12 
93.00 
96.15 
96.83 
98.80 

103.49 

$16.76 
6.93 
15.83 
24.19 
16.84 
20.3- 

23.82 

2 

8.05 

3 

19.71 

4 

33.30 

5 

20.55 

6 

24.49 

Averaee 

77.39 

95.65 

18.26             23.59 

r 


!• 


t. 


72 


BOOK-PAPKR    INDU.STRV. 


Section  2.  SODA-PULP  COSTS,  1915  AND  1916. 


Nine  book-paper  manufacturers  whose  paper  costs  were  obtained 
operated  16  soda-pulp  mills,  the  output  of  which  was  used  largely 
m  their  paper  mills.  The  costs  of  these  16  mills  have  been  used  to 
compute  an  average  cost  of  producing  soda  pulp  for  the  years  1915 
and  1916.  ^  -^ 

Table  25  shows  these  average  costs  by  items,  together  with  the 
increase  of  1916  over  1915  and  percentage  of  increase. 

Table  25.— Average  cost  of  production  per  ton  of  soda  pulp/or  16  mills,  1915  and  1916. 


1915 

1916 

Increase, 

1916  over 

1915. 

Per  cent 

of 
increase. 

Tons  produced 

266,  .S07 

319,623 

52,816 

19.80 

Stock: 

Wood 

$13.24 

1.98 

3.07 

1.90 

.05 

$13. 46 

2.38 

2.89 

L99 

.08 

10.22 

.40 

1.18 

.09 

.03 

Soda  ash  and  soda..       .                

1.66 

Bleach 

20.20 

Lime 

>  5.86 

Miscellaneous 

4.74 

60.00 

Total 

20.24 

20.80 

.56 

2.77 

Conversion: 

Labor 

5.29 

4.03 

1.45 

.31 

.76 

5.96 

4.48 

1.73 

.33 

.81 

.67 
.45 

.28 
.02 
.05 

Fuel 

12.67 

Repairs 

11.17 

Felts,  wires,  belting,  and  lubricants .".*!! 

19.31 

Miscellaneous 

0. 4o 

6.5S 

Total 

11.84 

13.31 

1.47 

12.42 

General  expense: 

Taxes  and  insurance 

.40 
1.08 

.41 
1.20 

.01 
.12 

Administrative 

2.50 

11.11 

Total 

L48 

1.61 

.13 

8.78 

Factory  cost,  without  depreciation. . . 

33.56 
1.50 

35.72 
1.25 

2.16 
».25 

Depreciation 

6.44 

•  16. 67 

Total  cost 

35.06 

36.97 

1.91 

5.45 

'  Decrease. 


The  table  shows  that  the  average  cost  of  producing  soda  pulp  for 
the  16  mills  rose  from  $35.06  per  ton  in  1915  to  $36.97  in  1916  an 
mcrease  of  $1.91  per  ton,  or  about  5.5  per  cent.  The  items  of  soda 
ash,  labor,  fuel,  and  repau^  showed  the  largest  actual  increases, 
ine  only  item  that  showed  a  decrease,  except  depreciation,  was 
bleach,  and  as  stated  above  (see  p.  64)  the  depreciation  charge  was 
computed  by  the  commission. 

Soda  jmlp  costs  for  first  quarter  of  1917.— Costs  were  obtained  for 
eight  soda-pulp  mills  for  the  fu^t  quarter  of  1917.  The  averacre 
cost  of  these  mdls  was  $34.58  per  ton  in  1915,  $35.82  per  ton  in  1916 
and  $43.48  per  ton  in  the  first  quarter  of  1917.  The  1917  cost 
represents  an  mcrease  of  $7.66  per  ton  over  1916  and  $8.90  over 
1915. 

The  following  tabulation  shows  the  costs  by  miUs  of  the  eio^ht 
soda-pulp  mUls  arranged  in  ascendmg  order  o'f  costs  for  the  fist 
quarter  of  1917: 


BOOK-PAPER   INDUSTRV. 


73 


MiU  No. 

1915 

1916 

First 

quarter, 

1917. 

1                                                             -------..-.-.-••----*--•-•"•-•-'■•"•■ 

$30.00 
36.02 
32.68 
35.96 
39.34 
36. 53 
34.72 
33.94 

130.78 
36. 57 
36.08 
38.01 
38.70 
37.93 
35.69 
37.36 

$39.06 

o 

40.24 

^.. ...... .•••-•■«•••--•-••• 

•1                                                         

41.49 

4                                                                     

44.07 

c 

45.81 

a 

46.64 

7                                                          

47.16 

8 

49.63 

34.58 

35.82 

43.48 

Percentage  of  cost.— The  percentage  of  the  total  cost  of  producing 
soda  pulp  attributable  to  particular  items  is  shown  by  Table  26, 
following,  for  the  years  1915  and  1916: 

Table  26.— Percentage  of  total  cost  of  producing  soda  pulp  of  16  mills  attributable  to 

particular  items,  1915  and  1916. 


Tons  produced . 


Stock: 

Wood 

Soda  ash  and  soda. 

Bleach 

Lime 

Miscellaneous 


1915 


266.807 


Total. 


Conversion: 

Labor 

Fuel 

Repairs 

Felts,  wires,  belting,  and  lubricants. 
Miscellaneous 


Total. 


General  expense: 

Taxes  and  insurance. 
Administrative 


Total. 


Factory  cost,  without  depreciation. 
Depreciation 


Per  cent. 

37.76 

5.66 

8.76 

5.42 

.14 


57.73 


1916 


319,623 


Per  cent. 

36.41 

6.44 

7.82 

5.38 

.21 


Increase, 

1916  over 

1915. 


52,816 


Per  cent. 

J1.35 

.79 

1.94 

1.04 

.07 


56.26 


U.47 


15.09 
1L49 

4.14 
.88 

2.17 


16.12 
12.12 

4.68 
.89 

2.19 


L03 
.63 
.54 
.01 
.02 


33.77 


36.00 


2.23 


1.14 
3.08 


4.22 


Lll 
3.25 


».03 
.17 


4.36 


14 


95.72 
4.28 


96.62 
3.38 


.90 
».90 


Total  cost 100.00 


100.00 


0.00 


1  Decrease. 


The  percentage  of  total  cost  attributable  to  wood  and  other 
stock  items  except  soda  ash  and  miscellaneous  was  lower  in  1916 
than  in  1915,  while  the  percentages  attributable  to  conversion 
items,  especiaUy  labor,  were  all  higher. 

Wood  represents  about  37  per  cent  of  the  total  cost  of  producmg 
soda  pulp  and  other  stock  items  about  20  per  cent  additional. 
Conversion  items  represent  from  about  34  to  36  per  cent  of  the 
total  cost,  the  most  unportant  of  which  are  labor  and  fuel.  General 
expenses  including  depreciation  represent  about  8  per  cent  of  the 
total  cost. 


i» 


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74 


BOOK-PAPER  INDUSTRY. 


Cost  of 'producing  soda  pulp,  by  groups  of  mills.— Teihle  27,  follow- 
ing groups  the  16  soda  pulp  mills  according  to  cost  and  shows  for 
each  group  the  number  of  mills  and  the  per  cent  of  the  total  tonnao-e 
produced.  ^ 

Table  27. —Cost  of  production  of  soda  pulp  in  16  mills,  arranged  by  groups  accordina 

to  cost  per  ton,  1915  and  1916. 


1915 


Group. 


I.  $27  to  $30 

II.  $30  to  $33 

UI.  $33  to  $36 

IV.  $36to$39 

V.  $39  to  $42 

VL  $42  and  above 

Total 


Number 
of  mills. 


Per  cent 
of  ton- 
nage. 


1916 


Number 
of  mills. 


Per  cent 
of  ton- 
nage. 


14.86 
15.03 
24.57 
22.96 
16.17 
6.41 


16 


100.00 


0 
2 
1 
9 
0 
4 


16 


0.00 
15.13 

9.31 
57.95 

0.00 
17.61 


100.00 


In  1915,  12  of  these  soda  pulp  mills,  producing  more  than  77  per 
cent  of  the  tonnage,  had  a  cost  below  S39  per  ton.  In  1916  12 
mills  producing  more  than  82  per  cent  of  the  total  tonnage,  had  a 
cost  below  $39  per  ton.  In  1916,  however,  4  miUs  had  a  cost  above 
*42  per  ton,  as  compared  with  2  mills  in  1915. 

The  costs  of  8  soda  pulp  mills  for  the  first  quarter  of  1917  are 
shown  by  mills  on  page  73  above. 

Advantage  of  paper  mills  producing  soda  pulp.— The  decided 
advantage  in  the  cost  of  making  paper  by  miUs  which  produce  their 
own  soda  pulp  is  shown  by  the  following  tabulation- 


Average  cost  of  production  of  8  mills. 
Average  price  paid  by  17  mills 


1915 


1916 


$34.58 
42.87 


$35.82 
45.83 


First 

quarter, 

1917. 


$43.48 
W2.76 


12  mills. 


The  open-market  price  for  soda  pulp  was  above  $100  a  ton  for 
a  coi^iderable  time  during  the  last  quarter  of  1916  and  the  first 
month  or  two  of  1917,  and  recent  quotations  have  been  above  $75. 

Section  6.— SULPHITE  COSTS,  1916  AND  1916. 

Six  of  the  twenty-one  book-paper  manufacturers  whose  paper  costs 
were  obtained  operated  nine  sulphite  mills,  the  output  of  which  is 
used  largely  in  making  paper.  The  costs  of  these  nine  mills  have  been 
used  to  compute  an  average  cost  for  the  years  1915  and  1916.  Table 
28  shows  the  average  costs  by  items,  together  with  the  increa.«ie  of 
191b  over  1915  and  percentage  of  increase.  The  costs  include  the 
bleaching  of  such  sulphite  as  was  converted  into  bleached  form 
before  being  used  m  making  paper. 


BOOK-PAPER  INDUSTRY. 


75 


Table  28. — Average  cost  of  production  per  ton  of  sulphite  for  9  mills,  1915  and  1916. 


1915 

1916 

Increase, 

1916  over 

1915. 

Per  cent 

of 
increase. 

Tons  produced 

179,419 

203,003 

23,584 

13.14 

Stock: 

Wood 

118.87 

2.71 

3.11 

.48 

.01 

$18.80 

2.56 

3.15 

.48 

.28 

i$0.07 

1.15 

.04 

.00 

.27 

10.37 

Sulphur  and  pyrites 

'5.54 

Bleach 

1.29 

Lime 

.00 

Miscellaneous 

2,700.00 

Total 

25.18 

25.27 

.09 

.36 

Conversion: 

Labor 

5.54 

2.73 

1.58 

.36 

.72 

5.6.5 

2.84 

1.59 

.39 

.75 

.11 
.11 
.01 
.03 
.03 

1.99 

Fuel 

4.03 

Repairs 

.63 

Felts,  wires,  belting,  and  lubricants . .» 

8.33 

Miscellaneous 

4.17 

Total 

10.93 

11.22 

.29 

2.65 

General  expense: 

Taxes  and  insurance 

.43 
1.08 

.51 
1.87 

.08 
.79 

18.66 

Administrative 

73.15 

Total 

1.51 

2.38 

.87 

^.62 

Faetorv  cost,  without  depreciation 

37.62 
1.50 

38.87 
1.25 

1.25 
».2a 

3.32 

Depreciation 

116.67 

Total  cost 

39.12 

40.12 

1.00 

2.56 

Decrease. 


The  total  cost  of  production  of  the  nine  sulphite  mills  increased 
from  $39.12  in  1915  to  $40.12  ia  1916,  or  about  2.6  per  cent.  The 
largest  increase  was  in  the  administrative  expense,  which  was  due 
to  the  fact  that  one  company  operating  three  of  the  miUs  doubled 
its  administrative  salaries  in  1916.  There  was  a  slight  decrease  in 
the  cost  of  wood  and  sulphur  per  ton  of  sulphite.  Tne  depreciation 
charge  per  ton,  which  as  stated  above  (see  p.  64)  was  computed  by 
the  commission,  was  also  less  in  1916  than  in  1915. 

Sulphite  costs  for  first  quarter  of  1917. — The  costs  of  eight  sulphite 
mills  were  obtained  for  the  first  quarter  of  1917.  The  average  cost 
of  these  mills  was  $38.90  per  ton  in  1915,  $39.91  in  1916,  and  $45.26 
per  ton  in  the  first  quarter  of  1917.  The  1917  cost  represents  an 
increase  of  $5.35  per  ton  over  1916  and  of  $6.36  per  ton  over  1915. 

The  costs  per  ton  of  the  eight  sulphite  milh  arranged  in  ascending 
order  of  cost  for  the  first  quarter  of  1917  are  as  follows: 


Mill  No. 

1915 

1916 

First 

quarter, 

1917. 

1 

$33.45 
39.52 
.34.40 
44.79 
39.86 
38.28 
39.96 
42.36 

$34.54 
4L90 
36.96 
42.97 
42.33 
40.69 
39.12 
42.13 

$66.76 

2 

37.38 

3 

40.^ 

4 

48.35 

5 

48.78 

6 

49.12 

7 

49.28 

8.  .             

51.67 

Average 

38.90 

39.91 

45.26 

ii 


3  i, 


/ 


a 


76 


BOOK-PAPKR   INDUSTRY. 


Percentage  of  cost.  -Tho,  percentage  of  the  total  cost  of  producing 
sulphite  attributable  to  particular  items  is  shown  bv  Table  29  fol- 
lowing, for  the  years  1915  and  1916: 

Table  2^. —Percentage  of  total  cost  o/ producing  sulphite  of  9  mills  attributable  to  par- 
ticular items,  1915  and  1916. 


1915 


1916 


Tons  produced ,-« 


Stock: 

Wood 

Sulphur  and  pyrites. 

Bleach 

Lime 

Miscellaneous 


419  ,    203,003 


Increase, 

1916  over 

1915. 


23,584 


Per  cent. 

48.24 

6.93 

7.95 

1.23 

.02 


Per  cent. 

46.86 

6.38 

7.85 

1.20 

.70 


Total. 


Conversion: 
Labor . . 
Fuel. . . 


64.37 


Repairs 

JTelts,  wires,  belting,  and  iubricants. 


Miscellaneous. 
Total. 


14.16 

6.98 

4.04 

.92 

1.84 


62.99 


Per  cent. 

U.38 

1.55 

>.10 

1.03 

.68 


U.38 


14.08 

7.08 

3.96 

.97 

1.87 


1  .08 
.10 

1.08 
.05 
.03 


27.94 


General  expense: 

Taxes  and  insurance. 
Administrative 


1.10 
2.76 


Total. 


3.86 


Factory  cost  without  depreciation '       on  ,  7 

Depreciation ]!!."!!!!!. ;         3  83 


Total  cost. 


27.96 


1.27 
4.66 


.02 


5.93 


96.88 
3.12 


100.00 


100.00 


.17 
1.90 

2.07 


.71 
1.71 


aoo 


Decrease. 


The  percentages  of  the  total  cost  attributable  to  stock  items 
were  less  for  1916  than  in  1915,  while  for  conversion  items  there 
was  little  change. 

The  item  of  wood  alone  represents  about  48  per  cent  of  the  total 
cost  of  producing  sulphite.  Other  items  bring  the  stock  cost  up  to 
about  64  per  cent  of  the  total.  Conversion  items  together  represent 
about  28  per  cent  of  the  total  cost.  The  most  important  of  these 
Items  IS  labor,  which  represents  about  14  per  cent  of  the  total  cost 
laxes  and  insurance  increased  but  slightly  in  1916,  while  adminis- 
trative expenses  increased  from  2.76  per  cent  in  1915  to  4  66  per 
cent  in  1916.  '       f 

Cost  of  producing  mlphite,  by  groups  ofmUls.—TMe  30  groups  the 
9  sulphite  mdls  according  to  costs  and  shows  for  each  group  the 
number  of  mills  mcluded  and  the  percentage  of  the  total  tonnac^e 
represented.  ^ 


BOOK-PAPER   INDUSTRY. 


77 


Table  30. — Cost  of  production  of  sulphite  in  9  mills,  arranged  by  groups  according  to  cost 

per  ton,  1915  and  1916. 


1915 

1916 

Group. 

Number 
of  mills. 

Per  cent 

of 
tonnage. 

Number 
of  mills. 

Per  cent 

of 
tonnage. 

I   Under  $35                                    .             

2 
4 
2 
1 

26.85 

40.65 

29.92 

2.58 

1 
2 
5 
1 

7.20 

II.  $35  to  $40           

31.39 

HI.  $40  to  $45            

58.63 

IV.  $45  and  over           .               

2.78 

Total 

9 

100.00 

9          100.00 

1 

In  1915  six  sulphite  mills,  producing  67.5  per  cent  of  the  tonnage, 
had  costs  less  than  $40  per  ton,  while  in  1916  only  three  mills,  pro- 
ducing 38.6  per  cent  of  the  tonnage,  had  costs  below  this  figure. 
In  1915  two  mills,  producing  nearly  30  per  cent  of  the  tonnage,  were 
in  Group  III,  with  costs  between  $40  and  $45  per  ton,  while  in  1916 
five  mills  producing  58.6  per  cent  of  the  tonnage  were  included  in 
this  group. 

The  costs  of  eight  mills  for  the  first  quarter  of  1917  are  given 
above  (see  p.  75). 

Advantage  of  paper  mills  producing  sulphite. — The  advantage  hi 
the  cost  of  making  paper  to  mills  producing  their  o\mi  sulphite  is 
shown  by  the  following  comparison : 


Average  cost  of  8  mills 

Average  price  paid  by  20  mills. 


1915 

1916 

$38.90 
5L16 

$39.91 
56.61 

First 

quarter 

1917. 


$45.26 

'86.58 


1 11  mills. 


Unbleached  sulphite  sold  above  $100  a  ton  in  the  open  market 
during  the  last  quarter  of  1916  and  the  first  month  or  two  of  1917. 
The  spot  price  has  since  declined  to  about  $75  per  tork  Bleached 
sulphite  sold  above  $200  a  ton  in  the  open  market  during  the  same 
period,  and  has  recently  sold  above  $100  a  ton. 

Section  6.  BOOK-PAPER  MILL  PROFITS,  1916  AND  1016. 

The  accountants  of  the  commission  secured  the  gross  and  net  sales, 
cost  of  sales,  and  profits  per  ton  of  the  21  book-paper  manufacturers 
operating  39  paper  mills,  whose  costs  of  making  paper  were  obtained. 
Table  31  shows  the  average  figures  for  the  machine-finish  and  super- 
calendered  paper  sold  by  these  companies  for  the  years  1915  and  1916, 
together  with  the  increase  and  percentages  of  increase  of  1916  over 
1915.  The  rate  of  profits  on  investment  is  shown,  in  the  following 
section.     (See  p.  80.) 


I> 


I »' 


I 


J 


H 


Jl\ 


.i. 


78 

Table  31. 


BOOK-PAPER  INDUSTRY. 


-Average  sales,  cost  of  sales,  and  profits  per  ton  of  paper  of  39  principal  booh 

paper  mills,  1915  and  1916. 


Tons  shipped i    649,546 


Gross  sales 177  21 


Less  freight  and  cartage 

Less  discounts  and  allowances. 


4.20 
1.62 


Increase    Per  cent 
1916  over         of 
1915.       increase. 


144.497 


22.25 


$15.60 


20.20 


.07 
.09 


1.67 
5.56 


5.82 


5.98 


16 


2.75 


Net  sales. 


71.39 


86.83 


15.44 


21.63 


L€ss  cost  of  sales  (including  general  expense) 62. 28 

Less  selling  expense j  .  gj 


69.  .56 

.76 


7.28 
1.05 


11.69 
»6.17 


63.09 


70.32 


r.23 


11.46 


Profits , 

Percentage  of  profits  on  net  sales . 


8.30 


16.51 


8.21 


98.92 


11.63 


19.01 


7.38 


63.46 


'Decrease. 


The  tonnage  sliipped  in  1916  was  22  per  cent  greater  than  in  1915 
and  the  gross  sales  per  ton  20  per  cent  greater.  Net  sales  per  ton  for 
1916  increased  21.6  per  cent  over  1915,  while  the  cost  of  sales,  in- 
cluding general  expense,  increased  only  11.7  per  cent  and  selling  ex- 
pense per  ton  declined  6.2  per  cent.  '  The  average  profits  of  the  39 
mills  increased  from  $8.30  per  ton  in  1915  to  $16.51  in  1916,  or  98.9 
per  cent,  and  the  percentage  of  profit  on  net  sales  increased  from  11.6 
to  19,  or  63.5  per  cent.  This  profit  was  made  on  the  total  shipments 
of  the  39  mills,  some  of  which  manufactured  and  sold  other  grades 
of  paper  than  those  classed  as  book  paper,  but  the  proportion  of  the 
total  tonnage  that  was  book  paper  was  about  the  same  in  the  two 
years,  so  that  the  increase  in  profits  is  representative  of  the  book- 
paper  business. 

Boole-paper  profits  for  the  first  ouaHer  of  1917,— The  commission  se- 
cured the  sales,  cost  of  sales,  and  profits  of  10  companies  operating  24 
paper  mills  for  the  first  quarter  of  1917. 

The  following  tabulation  compares  the  low,  high,  and  average 
figures  of  these  24  paper  mills  for  the  first  quarter  of  1917  with  those 
for  the  years  1915  and  1916: 


1915 


1916 


Low. 


Net  sales  • $64 .  56 

Cost  of  sales  1 50. 33 

Profits .'.'  8  2.00 

Per  cent  on  net  sales 


High. 


$95.67 
78.51 
21.27 


»3.1 


22.2 


Aver- 
age. 


$70.63 
60.32 
10.31 


14.6 


Low. 


High. 


Aver- 
age. 


First  quarter,  1917. 


Low. 


$67.93  $136.87  i$82.40 
^.29       90.34     65.85 


5.55 


8.2 


46.53  '  16.55 


34.0 


20.1 


$86.83 
62.19 
17.06 


19.6 


High. 


Aver- 
age. 


$201.40  $120.64 

141.21  I    83.43 

72.10      37.21 


35.8 


30.8 


» Does  not  include  selling  expenses,  which  amounted  to  about  76  cents  per  ton  in  1916. 


The  average  profits  of  the  24  mills  was  $10.31  per  ton  in  1915,  $16.55 
per  ton  in  1916,  and  $37.21  per  ton  for  the  first  quarter  of  1917.  At 
this  rate  the  increase  in  profits  fof  1917  would  be  about  261  per  cent 
over  1915,  as  compared  with  an  increase  in  cost  of  38  per  cwt     (S^e 


BOOK-PAPER  INDUSTRY. 


79 


p.  06.)  The  percentage  of  profit  on  net  sales  averaged  30.8  in  the 
first  quarter  of  1917,  as  compared  with  14.6  in  1915  and  20.1  in  1916. 
Profits  per  ton,  hy  groups  of  mills. — Table  32  below  groups  the  39 
paper  mills  according  to  the  profits  per  ton  realized  and  shows  for 
each  group  the  number  of  mills  included,  the  tons  sold,  percentage  of 
total  sales,  and  average  profit  per  ton. 

Table  32. —  Variations  in  the  profits  per  ton  oj  paper  sold  hy  39  hook-paper  mills  arranged 
by  groups  according  to  profits  per  ton,  1915  and  1916. 


1915 

1916 

Group. 

Num- 
ber of 
mills. 

Tons 
sold. 

Per  cent 

of  total 

sales. 

Average 

profit 

per  ton. 

Num- 
ber of 
mills. 

Tons 
sold. 

Per  cent 

of  total 

sales. 

Average 

profit 
per  ton. 

I.  $35  and  over 

2 
5 
4 
4 
7 
13 
3 
1 

10,300 
80,331 
91,075 
06,925 
70,039 
335,272 
104, 157 
35,924 

1.30 
10.12 
11.47 

8.43 

8.82 
42.22 
13.12 

4.52 

$43.86 

II.  $30  and  less  than  $35... 

32.96 

III.  $25  and  less  than  $30.. 

26.09 

IV.  $20  and  less  than  $25.. 

V.  $15  and  less  than  $20... 
VL  $10  and  less  than  $15.. 

VII.  $5  and  less  than  $10.. 

VIII,  Less  than  $5  > 

1 

5 

7 

12 

14 

19,628 

77. 572 

121,900 

240,502 

189,944 

3.02 
11.94 
18.77 
37.03 
29.24 

$21.28 

16.72 

11.89 

7.62 

2.07 

22.19 

17.06 

12.45 

7.42 

Total 

39 

649,546 

100.00 

8.30 

39 

794,043 

100.00 

16.51 

1  Includes  one  mill  which  transferred  its  output  at  cost  to  coating  mill. 

In  1915,  13  mills  representing  33.7  per  cent  of  the  tonnage  made 
profits  greater  than  $10  per  ton,  while  12  mills  representing  37  per 
cent  of  the  tonnage  made  between  $5  and  $10  a  ton,  and  14  mills 
representing  29  per  cent  made  less  than  $5  per  ton.  In  1916,  15  mills 
representing  31.3  pe.  cent  of  the  tonnage  made  profits  in  excess 
of  $20  per  ton  and  20  othei  mills  representing  51  per  cent  of  the 
tonnage  made  profits  in  excess  of  $10  per  ton,  while  only  4  of  the 
39  mins  representing  17.6  per  cent  of  the  tonnage  made  profits  less 
than  $10  per  ton. 

Of  the  24  mills  whose  piofits  were  obtained  tor  the  first  quarter  of 
1917,  oaly  2  showed  profits  less  than  $20  per  tan,  6  showec  profits 
betwee.i  $20  and  $30  per  ton,  6  between  $30  an:.  $40,  5  between  $40 
and  $50,  3  between  $50  and  $60  aui.  2  above  $60,  the  highest  oeing 
$72.10  per  ton. 

Coating  mill  profits. — The  sales,  cost  of  sales,  and  profits  were 
obtained  for  the  6  coating  mills  whose  costs  are  given  above  (see  p.  70) 
for  the  years  1915  and  1916.  These  figures  are  given  in  Table  33, 
the  miUs  being  arranged  in  order  of  piofits  for  1916. 

Table  33. — Net  sales,  cost  of  sales,  and  profits  per  ton  oj  6  coating  mills,  1915  and  1916. 


Mill  No. 

Net  sales. 

Cost  of  sales. 

Profits. 

Increase 
in  profits, 

1915 

1916 

1915 

1916 

1915 

1916 

1916  over 
1915. 

1 

89.42 
104. 36 

93.13 
104.57 

88.75 

$115.78 
124.25 
128.74 
116.  74 
118.35 
102. 44 

-  $70.79 
72.49 
82.28 
79.80 
81.62 
85.96 

«87. 31 
96.18 

101.83 
95.30 
99.12 
92.41 

$24.20 
16.93 
22.08 
13. 33 
22.95 
2.79 

$28.47 
28.07 
26.91 
21.44 
19.23 
10.03 

$4.27 

2 

11.14 

3 

4.83 

4 ., 

8. 11 

5 

'3.72 

6 , 

7.24 

Average , 

94.12 

118.43 

77.23 

95.17 

16.89 

23.26 

6.37 

tPecreasQ« 


w 

'I 


!?! 


I 


80 


BOOK-PAPER  INDUSTRY. 


The  table  shows  that  the  average  profits  for  the  six  coating  mills 
rose  from  $16.89  per  ton  in  1915  to  $23.26  per  ton  in  1916,  an  increase 
of  $6.37  per  ton,  or  about  38  per  cent.  This  increase  was  much  less 
than  for  machine  finish  and  supercalendered  book  paper,  which,  as 
shown  in  Table  32  above,  was  nearly  100  per  cent.  The  average 
profit  of  $16.89  per  ton  in  1915  represented  17.9  per  cent  of  net  sales 
and  the  average  profits  of  $23.26  per  ton  in  1916  represented  nearly 
20  per  cent  of  net  sales. 

One  of  the  six  coating  mills  showed  a  decrease  in  profits  of  $3.72 
per  ton  in  1916  over  1915,  but  its  profits  in  the  former  year  were 
$22.95  per  ton,  or  about  22  per  cent  on  net  sales. 

Section  7.  PROFITS  ON  INVESTMENT. 

The  commission  secured  the  book  investment  of  the  21  book-paper 
manufacturers  whose  costs  were  obtained  for  the  years  1915  and 
1916.  It  was  found  that  the  book  investment  of  these  companies 
was  fairly  representative  of  the  cost  of  investment  (the  only  true 
basis  on  whicn  to  figure  profits),  since  the  industry  is  generally  free 
from  the  inflations  in  capitalization  which  characterized  the  news- 
print industry.  The  net  book  investment  of  these  companies  has, 
therefore,  been  used  in  computing  the  rate  of  profits  on  investment. 
The  profits  used  in  the  computation  are  the  revised  net  earnings,  as 
computed  by  the  commission,  before  deducting  bond  interest. 

The  commission  found  it  impossible  to  make  a  separation  of  the 
investment  of  the  21  companies  by  grades  of  paper  or  even  by  mills, 
so  that  their  total  revised  net  earnings  are  compared  with  their  total 
book  investment.  In  most  cases,  however,  the  bulk  of  the  output 
of  the  coinpanies  is  book  paper,  so  that  the  rate  of  profit  on  invest- 
ment is  fairly  representative  of  the  results  of  book-paper  manufacture. 

Table  34  shows  the  rate  of  revised  net  earnings  on  the  net  book 
investment  of  each  of  the  21  book-paper  companies  for  the  years  1915 
and  1916,  together  with  the  average  for  each  year.  The  companies 
are  arranged  in  descending  order  for  1916. 

Table  34.— Rates  of  profit  on  net  book  investment  of  21  companies,  1915  and  191ti. 


Company  No. 


1915 


I 


1916 


1. 
2. 
3. 
4. 

5. 

6. 

7. 

8. 

9. 
10. 
11. 
12. 


Per  cent. 

12.86 

21.16 

1.35 

1.78 

10.03 

8.66 

5.45 

20.41 

12.50 

5.91 

11.02 

1.00 


PercerU. 
00.64 
38.30 
37.48 
29.67 
28.42 
27.67 
26.87 
25.21 
25.14 
24.28 
24.24 
23.78 


Increase, 

1916  over 

1915. 


Per  cent. 
47.78 
17.14 
36.13 
27.88 
18.39 
19.01 
21.42 
4.80 
12.64 
18.37 
13.22 
22.78 


Company  No. 


13 

14 

15 

16 

17 

18 

19 

20 

21 

Average 


1915 


Per  cent. 
6.50 
8.44 
1.95 
10.15 
7.17 
9.32 
.33 
4.43 
6.06 


1916 


Percent. 
19.99 
19.52 
17.97 
17.51 
17.09 
13.88 
10.90 
10.00 
8.23 


Increase, 

1916  over 

1915. 


Per  cent. 

13.49 

11.08 

16.02 

7.36 

9.92 

4.56 

10.57 

5.57 

2.17 


8.73 


21.52 


12.79 


The  average  rate  of  profit  on  investment  for  the  21  companies 
increased  from  8.73  in  1915  to  21.52  in  1916,  an  increase  of  12.79, 
or  about  147  per  cent.     Companies  such  as  No.  1,  which  sold  most  of 


BOOK-PAPER  INDUSTRY. 


81 


their  output  in  the  open  market,  made  very  liarge  profits  on  the  in- 
vestment in  1916,  as  compared  with  1915,  while  companies  such  as 
Nos.  8,  18,  and  21,  which  sold  most  of  their  output  on  contracts  made 
before  the  prices  had  risen,  made  only  moderate  increases  in  profits 
in  1916  as  compared  with  1915. 

Detailed  information  regarding  the  rate  of  profits  on  investment 
for  the  first  quarter  of  1917  was  not  obtained,  but  judging  from  the 
increase  in  profits  per  ton  the  average  rate  for  the  21  companies  was 
in  excess  of  40  per  cent. 

Section  8.  CONCLUSIONS. 

The  figures  in  the  foregoing  sections  show  that  while  the  costs  of 
book-paper  mills  were  rising  in  1916  and  the  first  quarter  of  1917, 
prices  and  average  receipts  at  mill  were  rising  more  rapidly,  with  the 
result  that  the  average  profits  per  ton  for  39  mills  making  machine- 
finish  and  supercalendered  paper  were  nearly  100  per  cent  greater 
in  1916  than  m  1915,  and  the  average  profits  of  24  mills  for  the  first 
quarter  of  1917  were  nearly  261  per  cent  greater  than  for  1915.  This 
finding  of  fact  is  clearly  shown  by  the  following  summary  tabulation, 
which  shows  for  various  items  the  percentage  of  increase  of  1916 
and  the  first  quarter  of  1917  over  1915. 


Item. 


Costs. 


.\  verage  cost  per  ton  of  39  book-paper  mills. 
Average  cost  per  ton  of  24  book-paper  mills. 
Average  cost  per  ton  of  6  coating  mills 


Sales. 

A  vera£;e  net  sales  per  ton  of  39  book-paper  mills . 
Average  net  sales  per  ton  of  24  book-paper  mills . 
Average  net  sales  per  ton  of  6  coating  mills 


Profits  per  ton. 


Average  profits  per  ton  of  39  book-paper  mills . 
Average  profits  per  ton  of  24  book-paper  mills . 
Average  profits  per  ton  of  6  coating  mills 


Profits  on  net  sal(s. 


Average  rate  for  39  book-paper  mills. 
Average  rate  for  24  book-paper  mills. 
Average  rate  for  6  coating  mills 


Per  cent 
of  in- 
crease, 
1916  over 
1915. 


Percent 
of  in- 
crease, 

first 

quarter 

of  1917 

over  1915. 


12. 


22, 


21. 


25. 


98. 


37. 


63. 


Profits  on  nvestment. 


Average  rate  for  21  companies . 


19. 


38.0 


147.0 


70.5 


260.8 


111.2 


The  present  situation  in  the  book-paper  industry  is  best  illustrated 
by  a  comparison  of  results  for  the  first  quarter  of  1917  with  the 
year  1915.  The  tabulation  shows  that  costs  advanced  38  per  cent  on 
the  average,  while  net  sales  advanced  70.5  per  cent  and  profits  260.8 
per  cent.     The  rate  of  profit  on  net  spies  of  39  mills  increased  63.5 


II 


m 


I 


12159°— S.  Doc.  T'J,  05-1- 


-ti 


82 


BOOK-PAPER  INDUSTEY. 


f    J' 


per  cent  in  1916  over  1915  and  the  rate  of  profit  on  investment 
increased  147  per  cent. 

It  is  evident  from  these  facts  that  the  book-paper  manufactm-ers 
have  advanced  their  prices  far  beyond  what  the  increased  costs  will 
justify.  In  doing  this  they  have  ignored  the  pubhc  interest  and 
placed  unnecessary  burdens  upon  pubUshers  and  other  purchasers 
which,  m  many  cases,  wiU  be  difficult  to  bear.  Most  of  the  book- 
paper  manufacturers  were  making  good  profits  in  1915,  their  asser- 
tions to  the  contrary  notwithstanding.  They  were  not  contented 
with  maintaining  these  profits,  however,  but  sought  to  exact  the 
maximum  profits  obtainable  as  a  result  of  panic  conditions  among 


CHAPTER  IV. 


ACTIVITIES  OF  MANUFACTUREES. 
Section  1.  THE  BTJBEAXJ  OF  STATISTICS. 

Of  the  40  important  book-paper  manufacturing  concerns  in  the 
limited  States^  with  aggregate  daily  capacity  of  about  3,000  tons,  23 
establishments,  with  combined  daily  output  of  approximately  2,200 
tons,  are  members  of  an  association  called  the  Bureau  of  Statistics, 
Book  Paper  Manufacturers.  This  association  is  unincorporated  and 
has  neither  constitution  nor  by-laws.  No  minutes  and  no  other 
records  of  meetings  of  the  members  are  kept.  The  only  officer  is 
C.  F.  Moore,  secretary,  whose  office  is  in  the  Vanderbilt  Hotel,  New 
York  City.  Members  of  the  western  group,  situated  in  the 
States  of  Ohio,  Michigan,  Wisconsin,  and  Washington,  hold  meetings 
from  time  to  time  in  the  city  of  Chicago.  The  eastern  group 
members  have  offices  in  New  York  City  or  in  the  States  of  Massachu- 
setts, New  Jersey,  or  Pennsylvania,  and  they  meet  in  New  York 
City  at  the  Vanderbilt  Hotel.  General  meetings  of  the  members 
of  both  eastern  and  western  groups  are  held  at  this  hotel.  Four 
leading  members  of  the  eastern  group  having  main  offices  in  New  York 
City  are  all  in  the  same  building,  No.  200  Fifth  Avenue.  The  meet- 
ings occur  at  irregular  intervals,  more  frequently  during  some  periods 
than  others.  Meetings  are  called  by  the  secretary,  usually  upon 
request  of  members. 

Alleged  purpose  of  the  bureau. — The  secretary  asserts  that  the  pur- 
pose of  the  bureau  is  purely  the  gathering  and  disseminating  of 
statistical  information.  The  facts  disclosed  indicate  that  the  activi- 
ties transcend  such  declared  purpose. 

Section  2.  ABNOKMAL  INCREASE  IN  PBICES. 

The  mill  prices  of  book-print  paper  increased  in  1916  until  in  the 
latter  part  oi  the  year  they  were,  m  many  instances,  between  two  and 
three  times  as  much  as  the  normal  prices  of  the  year  1915.  The  facts 
gathered  by  the  commission's  accountants  from  the  books  of  the 
mills  show  that  there  was  little,  if  any,  cost  justification  for  such 
ii;icrease.     (See  Chap.  HI.) 

Justification  for  undue  prices. — The  correspondence  proves  that  the 
manufacturers  knew  that  their  prices  and  profits  were  exorbitant,  but 
the  members  of  the  association  seek  to  justify  such  exactions  because 
prices,  they  claim,  in  the  past  have  been  low,  and  in  the  future  may 
again  be  so,  etc.  As  a  matter  of  fact,  most  of  the  companies  made 
good  profits  under  substantially  normal  conditions  in  1915. 

83 


I 


84 


BOOK-PAPEB  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


85 


N 


On  February  25,  1916,  a  member  wrote  to  another  that  his  com- 
pany felt  they  must  make  a  profit  to  partly  ''compensate  for  some  of 
the  losses  when  tho  prices  begin  to  dechne,"  and  'Vould  appreciate 
a  hne  from  you  statmg  what  you  are  doing  in  the  way  of  prices  '' 

In  a  letter  of  March  7,  1916,  the  same  member,  writing  to  the  same 
concern  stated  that  opportunity  should  not  be  lost  for  making  money 
that  had  not  been  made  in  the  past.  He  suggested  that  manufac- 
turers customers  be  made  to  pay  the  market  price  and  that  they  in 
turn  ''get  it  back  from  their  customers." 

At  a  general  meeting  on  June  14,  1916,  of  the  members  of  the 
iiureau  of  Statistics,  Book  Paper  Manufacturei-s,  held  at  the  office 
of  the  secretary  of  the  Bureau  of  Statistics,  in  the  Vanderbilt  Hotel 
New  York  City,  the  representative  of  a  prominent  member  concern 
said,  referring  to  his  own  company,  that  the  pubhc  had  ground  them 
down  for  years  and  that  now  they  were  going  to  make  the  public  pay 
Methods  used  to  effect  undue  price  enhancement— By  circular  letter 
the  secretary  distributes  to  members  some  small  amount  of  statistical 
information  based  upon  reports  made  by  members :  but  such  circular 
letters,  and  letters  passing  between  the  secretary  and  various  mem- 
bers individually,  as  well  as  correspondence  between  members,  and 
the  activities  of  certain  members,  show  that  this  association  has 
devoted  a  large  part  of  its  energy  to  inducing  undue  enhancement  of 
pnces.     Besides  corresponding  with  the  various  members  the  scre- 
tary  attends  general  meetings  and  meetings  of  each  group  and  indulges 
m    swinging  around  the  circle/'  as  it  was  called  by  one  member    so 
as  to  have  business  conversations  personally  with  the  members.    The 
vise  of  the  telegraph  and  telephone  have  also  added  materially  to  the 
effectiveness  of  the  secretary  s  work  and  the  work  of  this  association 
m  the  undue  enhancement  of  prices  of  book  paper. 

The  secretary  on  August  11,  1914,  sent  to  the  members  of  the  a.sso- 
ciation  a  circular  letter  which  contained  accounts  of  the  proceedin<^ 
of  the  meetings  of  the  western  group  of  members  held  August  7  and 
of  the  meeting  of  the  eastern  group  held  on  August  10.  In  this  letter 
the  secretary  advised  the  members  that  "it  seemed  to  be  the  imiform 
disposition  to  advance  prices.''  Following  closely  upon  this  date  one 
of  the  members  wrote  another:  ''Before  this  reaches  you,  vou  will 
have  been  undoubtedly  advised  that  *  *  *  company  has  ad- 
vanced their  prices  before  there  was  anv  other  advance  made  in  the 
market  and  their  prices  of  *  *  *  *^  are  $5  per  ton  higher  than 
what  the  market  is  supposed  to  be."  On  September  26,  1914  the 
secretary  wrote  a  member  that  the  western  manufacturers  were  in- 
clined to  advance  pnces,  and  added,  "I  expect  to  go  to  New  Encrland 
this  coming  week  and  hope  to  see  you."  "^ 

^,  ^^^^P^f  r  3;  1915,  one  member  wrote  the  secretarv  with  respect  to 
the  desirability  of  holding  a  meeting  "in  the  near  future,"  and  stated 
that  he  felt  confident  that — 

if  we  got  together  within  the  next  week  or  ten  days  and  established  a  minimum  price 
It  would  have  the  effect  of  stimulating  the  placing  of  orders,  and  it  wouldn't  be  long 

i^f«HfilH  K.'i?.  ^^^  ""^  ^1!''°T-  '^''''^^-  ^^  '^  ^^'"^  *^^^  ^«  co^ld  make  an  advanci 
]U8tifaed  by  the  increased  and  increasing  cost  of  manufacture. 

Eariy  in  the  following  month,  namely,  on  January  7,   1916,   a 

general    meeting  was  held  in  New  York  City,  and  about  two  weeks 

thereafter  (i.  e.,  January  22, 1916)  one  book-paper  manufacturer  wrote 


to  another  that  he  appreciated  "that  there  is  a  tendency  everywhere 
to  try  to  force  better  prices,"  and  that  he 

attended  a  recent  meeting  of  coated-paper  manufacturers  im  New  York,  at  which 
increased  costs  of  manufacturing  were  discussed; 

and  that  at  this  meeting  the  secretary  of  the  Bureau  of  Statistics 
remarked  that — 

it  seemed  quite  apparent  that,  while  there  was  every  reason  for  coated  manufacturers 
to  get  together  and  advance  prices,  it  looked  as  though  very  little  could  be  done  along 
that  line  at  this  time. 

The  effort  to  "force  better  prices"  and  to  have  the  prices  uniform 
as  to  all  manufacturers  during  this  period  is  clearly  shown  in  the  cor- 
respondence. Manufacturers  were  frequently  notifying  the  trade  and 
other  manufacturers  of  price  advances,  and  almost  invariably  giving 
as  the  reason  the  increasing  cost  of  raw  materials.  That  there  was 
no  cost  justification  for  the  prices  charged  abundant  evidence  ex- 
ists. A  member  of  the  bureau  (the  omy  one  who  seems  to  have 
held  off  from  joining  the  movement  to  unduly  enhance  prices)  in 
answering  a  letter  of  February  25, 1916,  from  another  member  stating 
that  the  latter  had  been  compelled  to  advance  prices  again,  as  the 
advance  .of  February  1  did  not  check  the  rush  of  orders,  said  that  he 
was  disappointed  to  see  his  correspondent  "make  extraordinary  ad- 
vances which  could  have  no  present  cost  justification,"  and  among 
other  letters  he  wrote  one  to  another  member  who  had  notified  him 
of  an  advance,  and  in  the  letter  he  said : 

Many  of  the  mills  are  merely  taking  advantage  of  the  present  abnormal  conditions. 
There  certainly  could  be  nothing  in  your  cost  of  doing  business  which  could  warrant 
these  frequent  advances,  and  they  are  obviously  for  one  of  two  reasons,  or  both — 
either  to  stop  orders  or  "cash  in"  so  far  as  possible  on  the  present  market. 

How  one  who  thus  spoke  the  truth  was  regarded  by  others  is 
indicated  in  a  letter  of  May  3,  1916,  in  which  one  member  wrote  to 
another  that  the  attitude  of  the  writer  of  the  above-quoted  passac^e 
''is  stated  to  be  a  depressing  influence  on  the  price  of  high-gra3e 
paper." 

The  capacity  of  the  concern  which  held  out  against  unduly  advanc- 
ing its  prices  was  limited.  This  fact,  together  with  the  correspondence 
relating  to  its  refusal  to  join  in  the  concerted  advance,  only  serves  more 
clearly  to  demonstrate  the  thorough-going  activity  as  well  as  respon- 
sibility of  other  members  and  of  the  secretary  concerning  higher  prices, 
for  they  repeatedly  urged  the  low-price  concern  to  change  its  pohcy. 
On  April  14,  1916,  one  of  the  most  active  members  wrote  to  one  of 
his  correspondents  that  he  did  not  approve  of  the  low-price  concern's 
pohcy,  but  added: 

We  hear  that  their  agents  are  practically  sold  out  and  nothing  to  deliver,  so  what 
is  the  difference  what  their  price  is? 

It  seems  that  it  was  the  principle  of  concerted  action,  the  idea  of 
having  all  members  act  in  concert,  which,  rather  than  the  actual  fear 
of  loss  of  business  by  the  high-price  concerns  to  the  low-price  con- 
cern during  the  pressure  of  big  demand,  was  the  impelling  reason  for 
their  anxiety  and  activity  in  the  matter.  On  May  13,  1916,  the 
secretary  wrote  a  member,  referring  to  the  obdurate  low-price  mem- 
ber, that  there  was  no  reason  why  one  manufacturer  should  fix  prices 
if  others  had  a  different  view  of  paper  value,  etc.     - 


If 


H 


i 


86 


BOOK-PAPER  INDUSTRY. 


Indicative  of  common  knowledge  of  and  responsibility  for  proposed 
advances,  is  a  letter  written  on  June  9,  1916,  by  a  prominent  member 
to  a  wholesaler,  a  little  more  than  a  week  before  one  of  the  o^eneral 
price  advances  m  book  paper:  *^ 

I  want  you  to  get  under  cover  if  you  think  you  want  any  of  our  papers  at  this  price, 

etc.,  and  on  the  margin  of  the  letter  he  wrote: 

Fireworks  about  to  start.    Get  busy  either  with  me  or  elsewhere.     Suit  yourselves 
but  consider  service.  jv/uiocivcss, 

Tins  brought  orders  from  the  wholesaler,  and  on  June  19    1916 
the  date  on  which  the  manufacturer  advanced  his  prices,  the  latter 
wrote  the  same  wholesaler: 

It  is  indeed  a  pleasure  to  see  you  get  'under  cover."     Many  have  insisted  that 

Sill."  IS  wmTo  ^i^r  ''^'  ^^  *""''^^^^'  ^^'  ^'^'  ^^^  ^  '^^^  ^^^^ 


EXHIBITS. 


Exhibit  1. 

STATEMENTS    BY    PAPER     MANUFACTURERS     REGARDING 
CAUSES  OF  THE  INCREASE  IN  PRICE  IN  1916. 


THE 


The  following  are  replies  to  question  8  of  a  schedule  sent  to  certain 
paper  manufacturers  in  November,  1916,  which  reads  as  follows: 

Submit  statement  of  your  views  regarding  the  causes  of  the  present  increase  in 
pnce. 

Amoskeag  Paper  Mills  Co :  Present  price  depends  on  supply  and 
demand.  Not  much  foreign  pulp  being  imported  and  higher  costs 
for  labor  and  all  materials. 

Bardeen  Paper  Co. :  Because  of  increase  in  cost  of  raw  materials, 
supplies,  and  labor. 

Bergstrom  Paper  Co. :  The  unremunerative  prices  prevailing  in 
the  past.  The  increased  prices  of  raw  material,  fuel,  labor,  and 
general  manufacturing  costs.  The  increased  domestic  demand 
principally,  with  some  for  export. 

Bryant  Paper  Co. :  Wage  increase,  over  50  per  cent;  sulphite  pulp, 
from  200  to  300  per  cent;  soda  pulp,  over  100  per  cent;  rags,  over 
200  percent;  old  papers,  from  150  to  200  percent;  chemicals,  100 
to  300  per  cent;  wires,  over  100  per  cent;  felts,  over  50  per  cent; 
coal,  about  50  per  cent;  clay,  about  50  per  cent.  Raise  in  freight 
rates  both  in  and  out.  Apparently  even  these  advances  will  be 
greater  instead  of  less. 

Champion-International  Co.:  Increased  cost  of  manufacturing 
due  to  high  price  of  labor  and  materials  and  the  extreme  uncertainty 
as  to  future  costs,  coupled  with  unusual  demand  for  product. 

Combined  Locks  Paper  Co. :  Advance  in  labor  and  raw  materials 
has  increased  costs,  while  price  of  finished  stock  is  result  of  change 
in  costs  and  of  supply  and  demand. 

Crocker,  Burbank  &  Co.  (Inc.):  As  we  purchase  all  our  raw  mate- 
rials, it  is  the  rising  cost  of  raw  materials  which  has  increased  the 
cost  of  our  paper  here,  together  with  quite  an  increase  in  the  cost  of 
labor. 

We  presume  that  in  addition  to  the  actual  increase  in  cost  of  the 
raw  materials  themselves  th«re  is  a  sentimental  rise  in  price  due  to 
the  fact  that  there  is  only  about  75  per  cent  of  raw  materials  pro- 
curable with  which  to  run  the  print  paper  mills  of  the  United  States, 
and  unless  some  other  source  of  supply  is  discovered,  and  should  the 
war  continue,  there  is  likely  to  be  a  further  marked  advance  in  prices. 

Formerly  we  imported  large  amounts  of  old  papers  and  rags  from 
England  and  the  Continent.     These  have  been  entirely  shut  off. 

The  supply  of  sulphite,  sulphate,  and  soda  pulps  from  Norway  and 
Sweden  has  been  greatly  curtailed.  The  manufacturers  in  those 
countries  have  also  advanced  their  prices,  so  that  where  we  formerly 

87 


]l 


m 


88 


fiOOK-PAPER   INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


89 


I.  I 


paid  2J  cents  per  pound  for  bleached  sulphite  pulp  from  Norway 
we  have  had  to  agree  to  pay  7h  cents  per  pound  for  a  supply  for  the 
first  three  months  in  1917. 

Curtis  &  Bro.  (Inc.):  Increased  cost  of  labor  and  all  materials 
entering  m to  manufacture  of  paper. 

Diana  Paper  Co. :  Increased  cost  of  labor,  supplies,  felts,  wire,  coal, 
pulp  wood,  sulphite,  and  ovory  item  entering  into  the  cost  of  making 
paper.  ^ 

Dill  &  Collins  Co  :  Lack  of  encouragement  to  develop  more  mills 
due  to  hostile  legislation  previous  to  the  war.  Since  the  war  due 
to  unprecedented  demand,  which  makes  a  short  supply  of  paper  ' 

hmerson  Paper  Co. :  High  prices  for  raw  materials  anS  a  greater 
demand  for  paper  than  the  existing  supply 

Everett  Pulp  &  Paper  Co.:  Owing  to  the  generaUy  prevailing 
more  prosperous  business  conditions  in  tiiis  country,  more  paper  is 
being  consumed  than  ordinarily,  and  owing  to  the  nonoperation  of 
paper  nulls  in  Europe  due  to  the  war,  the  foreign  demand  for  Ameri- 
can paper  is  abnormally  great.  In  other  words,  the  law  of  supply 
and  demand  is  fixing  and  controlling  the  prices  of  paper  *^ 

Fitchburg  Paper  Co.:  Avarice  of  soda,  poplar,  and  pulp  manu- 
facturers Price  advanced  $2.42  per  hundred  by  agreement  Cost 
increased  $0.30  per  hundred.  ' 

French  Paper  Co.:  Supply  and  demand,  coupled  wiMi  rapid  ad- 
vance in  everything  we  buy.  Eight-hour  shifts  have  increased  labor 
costs  50  per  cent,  and  chemical  pulps  have  advanced  200  to  300  per 
cent). 

Frank  Gilbert  Paper  Co.:  In  reply  to  paragraph  8  as  to  the  causes 
of  the  present  increase  m  price  of  paper,  would  say  that  I  behove  that 
the  consumers  of  paper  will  never  reahze  how  honest  and  considerate 
the  manufacturers  of  paper  have  been.  I  do  not  know  of  a  single 
manufacturer  of  paper  whoso  effort  has  not  boon  to  keep  the  price  of 
paper  down  rather  than  to  take  advantage  of  the  situation  and 
advance  prices  unduly.  As  to  specific  causes,  among  many  others 
would  mention  the  following:  &  J  °, 

First.  High  cost  of  labor. 

Second.  Shortage  of  labor,  causing  curtailed  production  creating 
actual  scarcity.  ^ 

Third    Lack  of  rain  in  almost  every  paper-making  section,  which 
has  made  a  shortage  of  ground  wood  pulp  and  caused  high  prices 
which  the  paper  manufacturer  must  take  into  account  when  quoting 
prices.  ^         =» 

Fourth.  The  adoption  of  the  three-tour  system  in  almost  all  miUs 
which  has  added  a  tremendous  labor  charge  to  paper  manufacturing 

Fifth.  Increase  in  the  cost  of  chemical  pulp,  due  to  the  high  cost  of 
labor  and  chemicals  and  low  water. 

Sixth.  HigV  cost  of  wood,  due  to  the  increased  cost  of  labor  in 
putting  men  into  the  woods  and  of  boarding  them. 

Seventh.  An  actual  scarcity  of  many  chemicals  and  high  prices  for 
same,  due  to  the  lack  of  importations. 

Eighth.  Practically  no  importations  of  foreign  pulp,  which  has 
caused  great  bidding  for  the  small  supply  available  and  consequent 
high  prices  for  paper.  ^ 


Ninth.  Tlie  unprecedented  demand  for  paper  which  has  caused 
many  users  to  offer  high  prices  for  special  services  in  the  way  of  de- 
liveries. 

Tenth.  Lack  of  standards  in  sizes.  This  feature  deserves  serious 
consideration  with  regard  to  book  paper  and  particularly  as  concerns 
news  paper  required  by  small  publishers  throughout  the  country. 
The  small  pubhshers  in  very  many  cases  use  flat  presses  which  are 
very  old  and  for  these  presses  they  require  special  sizes  of  paper.  K 
the  small  pubhsher  could  order  straight  carload  lots  in  his  particular 
size  and  weight,  it  would  not  be  so  (Efficult  for  mills  to  supply  them, 
but  they  usually  buy  a  ton  at  a  time  at  infrequent  intervals  and  the 
ordinary  fast-running  paper  mill  can  not  stop  its  machinery,  change 
the  size  of  the  sheet,  cut  up  the  paper,  Wrap,  tie,  and  ship  it  and  charge 
the  customer  price  high  enough  to  give  him  a  new  dollar  for  an  old 


one. 


P.  H.  Glatfeller  Co.:  Increased  cost  of  labor,  coal,  raw  materials, 


etc. 


W.  C.  Hamilton  &  Sons:  Enormous  advance  in  wages,  coal, 
chemicals,  and  particularly  the  scarcity  and  great  advance  in  price  oi 
foreign  and  domestic  sulphites;  and  the  demand  much  greater  than 
the  possible  production. 

The  Hartford  Paper  Co. :  AU  that  can  be  said,  that  I  know  of,  in  a 
free  country  like  those  United  States  every  person  has  a  right  to  put 
their  own  price  to  their  own  labor,  whether  in  exchange  of  material 
or  to  the  direct  production,  and  the  buyer  of  such  has  the  same  un- 
qualified right  to  take  or  leave  it  as  he  may  choose,  granting  that  the 
parties  are  of  equal  standing. 

Holden  Paper  Co. :  Increased  cost  of  raw  materials  and  increase  of 
cost  in  operating. 

Inland  Empire  Paper  Co. :  Largely  due  to  high  cost  of  raw  materials. 

Jessup  &  Moore  Paper  Co.:  Largely  increased  demand  for  paper. 
Great  scarcity  of  and  increased  cost  of  pulp  and  all  materials  for  paper 
making.     Increased  cost  and  scarcity  of  labor. 

Kalamazoo  Paper  Co. :  Increase  in  all  material  and  labor  costs  and 
demand  much  in  excess  of  supply. 

Kimberly-Clark  Co.:  The  very  material  increase  in  the  cost  of 
manufacture  and  the  fact  the  demand  is  very  much  in  excess  of  the 
supply. 

King  Paper  Co. :  Increased  labor  and  material  costs. 

Lakeside  Paper  Co.:  Supply  less  than  demand. 

The  Mead  Pulp  &  Papol'  Co.:  High  price  of  everything  entering 
into  the  manufacture  of  paper.  Change  from  two  tours  to  three 
tours  of  eight  hours  each.     Production  not  equal  to  the  demand. 

Menasha  Paper  Co. :  Extraordinary  foreign  and  domestic  demand. 

The  Miami  Paper  Co. :  Demand  and  supply. 

Monadnock  Paper  Mills:  There  are  several  reasons  causing  the 
present  increase  in  price  of  paper,  in  our  opinion,  which  are  as  follows: 

First.  The  initial  reason  was  caused  entirely  by  the  news-print 
publishers  when  they  retained  John  Norris  to  depreciate  the  price  of 
paper  a  number  of  years  ago.  The  paper  mills  at  that  time  were  not 
making  a  profit,  and  this  was  the  first  step  toward  discouraging 
capital  entering  the  manufacture  of  paper.  Again,  the  news-print 
puolishers,  when  they  induced  the  Republican  administration  under 
President  Taft  to  allow  free  print  to  come  from  Canada,  took  the 


(« 


"aBwe?;:— -i -' 


90 


BOOK-PAPER  INDUSTBY. 


nianufacturer  S  mZ^ulphirf^r  Tv"''  *'^^"  the  Aml'rkan 
has  pract  caUy  stoDoed  f.«..=inT  i-    •     , '^  importation  of  puln 

for  sulphite.  SSrforTn^umhpr  ;,'?''''''  '^T"?^  '»  ^^is  couStr? 
been  equal  to  the  supply  and  ThL  ^offtf  'V  ''"?*"'^  ''^^  "^^e' 
the  demand  is  far  aheVd  of  the  suddTv  nil,  *  if  '""^  ^S^''^"  ^o-day 
in  price  Practically  eyerjthfnreffin^  Wn  7/*""'"^/"  '"'"^'^^ 
advanced  enormousry  Fourdrmitr^I^  -^^  ^^^  ^"^^  ^^  Paper  has 
cent;  felting  is  up;  4or  .s "cl^ce  and  Wh^.r  ""^r''  '^^  P^^ 
the  present  time  is  critical  ^''^''  **"«  <=»»'  situation  at 

return  r^Ll''L"e?tS:LX'orL?r  T'^^l^  *^«^-^e 
paper  machines  added  and  noTncreied  'odT.H*^'.''"""  ^''^  ^'"^ 
This  with  business  conditions  in  thi.         Production  for  some  time 
eign  demand  for  paper  has  ma  prill     •'""'*'^  f""^  ^^^  enormous  for 

Monarch  Paper^cS  f  IncrT^edcl^  ^creased  the  selling  price, 
unusual  demand.  ^^^creaseU  cost  of  all  materials  and  fabor  and 

ingjioure^^ieS^cost'oFcoate         '^.^'^'  'e-^uction  of  work- 
stuffs,  and  all  other  machined    em^n^^'f  P*P"''  «h«micals,  dye- 
cotton  felts,  wire  cloth,  and  Kher^d'Z^  '  T^"^'  ^°°'«"  ^^'ts. 
Increased  expenses,  including  1  abHitV   «n/  "{I'^/aP^'-  ^^^^  supplies 
Increased  shipping  ^osts,  etc  '   ""'*  ""  ^°'"'°«  "^  insurance. 

niate'rTaJSdY^rattu^ehi'L^r^^^^  -^  raw 

froK,^^^P-S!in?rir?ot^^^^^^  »'l^«'P  and  paper 

Oxford  Paper  Co.:  Demand  and  supply 

Patten  Paper  Co   (JAd  )■  Thi!.       ^^7'    , 
are  that  aU  raw  sto  k   nLd?  ^und  wood'  '"^^^f^^V"  our  prices 
and  bleached  soda  pilps    tZk    rh^i    i     /  "nbleaehed  sulphite, 
clay    alum,  size  and^ TacW^ '  powder?  I  ^'°^T'  J¥''^  ^^na 

of  the  tre-tu\%Sm'rak"e^'aTlnSSVf  ^'^^  ^^-^uction 
normal  times.  In  fact,  evemhin"  W  "  "^  about  one-third  oyer 
the  mill  has  increased  mor^orj^fs  ^tch'^"''  ")  connection  with 
surance,  and  taxes.  '    "^^'^  a®  oyerhead  expense,  in- 

FmalJy,  on  account  of  the  removal  nf  ta^ia 
years  ago   in  plain  opposition  to  findhii  of  fh"  ^"^PA^^'^  ««^eral 

=ttiit%\iVar;l^^^^^^^^^ 

supply  and  dem^d  2d  the  wJh^U^sr  oS  SS  '^  ^'"  '^"  "^ 


BOOK-PAPER  INDUSTRY. 


91 


Reading  Paper  Mills:  Due  solely  to  increased  cost  of  raw  materials 
and  labor. 

Rex  Paper  Co.:  Supply  and  demand. 

Ticonderoga  Pulp  &  Paper  Co. :  Scarcity  of  raw  materials,  due  to 
the  war,  scarcity  oi  labor,  and  the  unprecedented  demand  for  paper. 

Tileston  &  Hollingsworth  Co. :  The  European  war. 

The  Wanaque  River  Paper  Co.:  The  cause  of  the  recent  increase 
in  price  of  paper  may  be  assigned,  in  our  opinion,  to  three  general 
heads : 

(1)  Rise  in  price  of  all  raw  material  and  of  labor,  so  that  the  doUar 
is  depreciated  for  the  paper  manufacturer  as  well  as  for  all  others. 

(2)  Increase  in  demand. 

(3)  Timidity  of  capital  about  new  investment  in  a  manufacturing 
industry  discriminated  against  by  recent  tariff  laws. 

The  European  war  has  shut  off  a  large  part  of  our  supply  of  raw 
materials  and  chemicals  and  has,  through  the  attendant  business 
stimulus,  created  an  extra  demand  for  paper  as  well  as  for  other 
conmaodities.  Labor  has  demanded  shorter  hours  and  at  the  same 
time  more  pay  to  meet  the  increased  cost  of  living.  It  is  necessary 
to  collect  here  larger  quantities  of  rags  and  old  papers  to  make  up 
for  what  formerly  came  from  Europe ;  and  to  accomplish  this  a  much 
higher  price  must  be  paid  for  sucn  material  in  order  to  induce  the 
people  to  save  it.     Labor  for  collectins:  is  particularly  scarce. 

The  paper  mills  have  always  heretofore  Duilt  too  fast  for  their  own 
good  and  paper  has  been  low  priced  in  this  country  compared  with 
other  products.  The  publishers,  not  satisfied  with  conditions  so 
favorable  to  them,  have  used  their  power  of  publicity  and  their 
influence  over  public  men  to  secure  legislation  so  unfair  to  paper 
manufacturers  that  the  overbuilding  and  the  overproduction  has 
at  last  been  checked  and  the  price  of  paper  is  therefore  higher  than  it 
would  have  been  if  the  adverse  legislation  had  not  been  enacted. 

At  present  it  would  be  almost  impossible  to  secure  the  necessary 
machinery  to  enlarge  paper-making  plants,  to  say  nothing  of  present 

Erohibitive  prices  for  such  machinery  as  could  be  had;  and  with 
ook  paper  on  the  free  list  and  most  of  the  paper  manufacturer's 
supplies  higher  protected,  it  would  be  injudicious,  to  say  the  least, 
to  increase  investments  in  paper-making  plants  without  some  assur- 
ance that  the  manufacturer  of  paper  would  receive  the  same  treat- 
ment from  the  Government  as  other  American  manufacturers  not 
especially  selling  to  publishers. 

S.  D.  Warren  &  Co. :  In  considering  this,  we  will  take  up  the  reasons 
in  what  we  consider  the  order  of  importance. 

1.  Demand. — For  many  years  the  book-paper  business  has  been 
imsatisf actory,  with  a  capacity  far  in  excess  of  demand  and  prices  low, 
and  consequently  unprofitable.  In  1915,  for  the  first  time  in  our 
history,  we  were  obliged  to  curtail  operations  and  run  the  mill  five 
days  a  week.  The  attached  sheet  shows  the  orders  received  during 
1915  and  up  into  1916,  as  well  as  the  stock  of  paper  on  hand,  and  the 
average  product  per  day  in  tons.  From  this  you  wiU  note  that  the 
increased  demand  began  in  November,  1915,  as  shown  by  the  in- 
creased orders,  and  the  decrease  in  stock.  The  demand  increased 
imtil  the  orders  received  in  March,  being  more  than  two  months' 
capacity,  compelled  us  to  refuse  to  receive  orders  except  to  the  capacity 
of  our  mill,  and  to  then  begin  efforts  to  so  apportion  the  capacity 


ii\ 


92 


BOOK-PAPER   INDUSTRY. 


amongst  our  customers  as  to  treat  everyone  fairly  and  distribute  our 

5I^«n  "'  f'^^'fl  ^',  P°'''"''  throughout  our  tra^de.  The  increasZ 
demand  not  only  took  our  stock,  as  the  figures  show,  but  to  meet  the 
situation  wo  made  every  effort  to  increase^our  production,  as  is  again 
shown  by  the  figures.  This  demand  seems  to  have  been  generalTnd 
due  to  the  requirements  of  the  business  world  as  a  4ole.  Our 
Si'  fi>"°*  "'*^'"'^''  any  appreciable  foreign  demand,  and  for  manv 
to  the  )rke  ""^'l'"''^'"^"'^  ^*^«  ^een  for  paper  without  much  regard 

r,.,?;  ^"il  ?/'■««'  rrmterials.-The  principal  raw  material  is  sulphite 
pulp.  Ihis  we  can  not  manufacture,  but  buy,  largely  in  Canada 
to  a  small  extent  in  this  country,  and  in  the  past  we\ave  bou-ht 
SZt'"*'''  foreign  sulphite.  The  war  cease<f  all  shipments  f^Sm 
SrSJ'  ^rt  ^^'  '^.f'^T^  ro™  Norway  and  Swedeii  were  soon 
curtailed.  The  scarcity  of  coal,  the  fact  that  sulphur  was  a  contra- 
band of  war  the  partial  mobilization  of  Sweden,  with  the  consequent 
dearth  of  labor  and  the  high  price  of  hoi^es,  supplies,  etc  for  ^00] 
operations  naturally  resulted  in  gradua%  increased  coste  and 
dimmished  outnut  with  consequent  advance  in  price.     This  being 

bv  sI!h  ^^  *'^-rf^'^'%  "'  ^''^^  ?"'*i°  t*'  the  shipment  of  materki 
.>f«  a,t  f'7'*''  t^Ydv^na^m  freights  and  war  risks  has  resulted 
m  a  great  advance  of  price.  The  Canadian  mills  are  suffering  from 
scarcity  of  fuel  and  shortage  of  men,  both  in  the  mills  and  in  th^ 
woods.  Many  mills  m  this  country  which  formerly  sold  their 
surplus  have  now  not  only  required  it  aU,  but  been  in  the  market,  and 
the  widely  stunulated  demand  has  been  entirely  beyond  the  capkc  tv 

fsn?/9'^^  ""  "°^*-^  Unbleached  sulphite-"  has  advanced  from 
1.80  t«  2  cente  per  pound  to  from  4.75  to  5i  cents.  Bleached  sulphite 
has  advanced  from  2  75  to  3  cents  per  pound  to  6  to  "i  cente  and 
spot  lot^  of  both  grades  of  pulp  have'^solS  at  much  higher  figures. 

Coal  has  advanced  very  seriously.  We  are  now  paying  $9  75  ner 
ton  where  we  used  to  pay  $2.75  to  $3.25.  "  ^ 

Colore  for  which  we  used  to  pay  30  and  40  cente  per  pound  have 
advanced  seriously.  Some  of  tLse  colon,  have  been  cost^^  as  K 
as  }$iD  per  pound.  ^  ® 

Wages  have  ia  our  mills  been  advanced  three  times  since  the  1st 
of  January,  aggregatmg  between  25  and  28  per  cent 
pleaching  powder,  which  formerly  cost  IJ  cents  per  pound  dehv- 

h^wl'fff'^  "f^"^  ^^  "'S^^^  ^*  '"^^  P^^  P^^^^l  ^nd  has  been  Is 
nign  as  16  cents  per  pound. 

Soda  ash  has  advanced  from  one-half  cent  per  pound  to  3  cents  ner 
pound,  and  many  other  chemicals  in  proportion  ^ 

,^  oo^!^' ^^  '^^^}''^  ^^  "^^  ^^^S^  amounts,  has  advanced  from  6i  cents 
to  zj  to  zo  cents. 

While  it  is  true  that  we,  as  well  as  other  manufacturers,  were  pro- 
tected to  a  certain  extent  by  contracte  for  raw  materials  previously 

t^A^^ ■''u'  '  •  ^^  ^^^°  1r"="l*  t°  "''"'i'l  deliveries,  as  they  have 
had  their  handicaps  as  well  and  have  found  it  impossible  in  many 
cases  to  obtain  their  raw  materials.  ^ 

»^L  ^T**  emhargoes.-Here  in  NewEngland  freight  embareoes  have 
exited  almost  the  whole  year  through,  materially  increasinl  the  cost 
of  d^hvery  of  our  finished  product  and  increasing  the  cost  ofiucomii^ 


BOOK-PAPER  INDUSTRY. 


93 


4.  We  beheve  that  the  whole  situation  is  affected  by  the  abnormal 
increase  in  the  supply  of  gold,  and  hence  in  the  depreciation  of  the 
currency  and  the  lall  in  the  purchasing  value  of  a  doUar,  which  must 
necessarily  result  in  apparent  increase  in  price. 

Watab  Pulp  &  Paper  Co.:  The  same  reasons  as  have  caused  the 
legitimate  advance  of  other  products. 

Watervhet  Paper  Co.:  Scarcity  of  raw  materials,  increased  cost  of 
labor,  and  law  oi  supply  and  demand. 

West  Virginia  Pulp  &  Paper  Co. :  Demand  exceeds  supply. 

Geo.  W.  Wheelwright  Paper  Co. :  Increase  in  the  cost  of  every  liber 
tibor,  every  chemical,  materials,  supphes,  replacements,  labor,  fuel, 
taxes. 


;♦' 


Exhibit  2. 


THE  PEINT  PAPEE  SITUATION. 

ADDRESS  OF  CHARLES  F.   MOORE,    SECRETARY  BUREAU  OF  STATISTICS 
BOOK-PAPER      MANUFACTURERS,     DELIVERED      BEFORE      THE      NEW 
YORK    BUSINESS    PUBLISHERS    ASSOCIATION    AT    THE    ADVERTISING 
CLUB,  OCTOBER   2,  1916.  ^r^ntiaiisii 

I  am  very  glad,  indeed,  to  have  this  opportunity  to  talk  with 
representative  publisher^  in  regard  to  the  book-paper  situation; 
and  let  it  be  understood  that  when  I  use  the  term  -book  paper'' 
1  mean  all  printing  paper  other  than  news  print. 

It  IS  a  time  when  conditions  are  far  from  normal  and  are 
unsatisfactorv  to  both  manufacturer  and  consumer.  I  am  perfectlv 
sure  we  would  aU  be  better  pleased  if  we  were  not  surrounded  anSl 
confronted  with  so  much  uncertainty.  The  producer  would  prefer 
to  know  upon  what  he  might  depend  in  the  future  and  to  conduct 
his  busme^s  upon  more  stable  fines,  just  as  the  publisher  would 
preler  It,  but  as  that  can  not  be  done  we  are  compeUed  to  accept 
the  situation  and  make  the  best  of  it,  meanwhile  dealing  with  each 
other  m  the  spirit  of  mutual  frankness  and  fairness. 

1  fully  appreciate  the  fact  that  this  is  a  trying  time  with  the 
publisher  and  I  very  much  fear  that  he  will  get  httle  comfort  out 
of  the  truth  which  I  propose  here  and  now  to  speak.  There  could 
be  no  purpose  m  my  holding  out  a  false  hope  or  in  making  anv 
intentional  misstatement  of  the  facts.  &       ^ 

The  daily  press  has  had  a  great  deal  to  say  about  the  selfish- 
ness and  greed  of  the  paper  manufacturer.  He  has  been  accused 
of  seeking  in  every  way  to  take  advantage  of  the  present  crisis 
without  showing  any  consideration  whatever  for  the  consumer 
onlv  IS  he  charged  with  selfishness,  but  the  accusation  has 
repeatedly  been  made  that  the  manufacturers  have  combined  and 
conspu-ed  in  violation  of  the  law  for  the  purpose  of  exacting  the 
uttermost  farthing  from  the  helpless  consumer. 

These  promiscuous  and  unfounded  accusations  have  not  come 
to  any  great  extent  from  the  consumers  of  printing  papers  other 
than  news  print.  The  charge  has  been  made  by  the  daily  press 
which  m  the  main  uses  news  print  paper;  but  it  has  not  discrimi- 
nated in  making  the  accusations.  All  paper  manufacturers  have 
been  classed  together  as  lawbreakers. 

You  can  understand,  therefore,  that  in  the  face  of  these  repeated 
attempts  to  incriminate  paper  manufacturers  I  am  very  elad  to 
have  the  opportunity  to  speak  frankly  with  that  class  of  publishers 
who  have  shown  a  disposition  to  be  fair  and  an  inchnation  to  hear 
tne  trutn. 

I  need  not  tell  you  that  there  has  been  a  very  great  advance  in 
the  price  of  book  papers.     You  are  aware  of  that  fact,  just  as  you 


BOOK-PAPER  INDUSTRY. 


95 


know  also  the  difficulty  of  procuring  the  prompt  delivery  of  paper 
at  any  price.  Time  and  again  I  have  been  asked,  and  am  now  re- 
(juested  to  explain,  if  I  can,  why  this  apparently  unreasonable 
increase  in  the  cost  of  paper,  why  the  great  difliculty  in  procuring 
it  at  any  price,  and  whether  the  increase  in  cost  of  production 
justifies  the  prevailing  price  at  which  paper  is  selhng. 

That  an  unlimited  quantity  of  paper  can  not  be  had  when  de- 
sired is  very  readily  understood  by  those  who  have  inquired  into 
the  situation.  The  fact  is  there  is  a  world-wide  paper  famine,  and 
there  is  nothing  more  unusual  about  the  difficulty  in  procuring 
paper  when  the  supply  is  short  of  demand  than  there  is  about  pro- 
curing wheat  or  corn  when  the  crop  is  short.  You  can  not  get  what 
does  not  exist. 

But  you  want  to  know  why  this  shortage  of  supply.  The  answer 
is  that  in  the  European  countries  production  has  been  reduced  to 
a  minimum  by  the  great  war,  while  in  the  United  States  consump- 
tion has  enormously  increased. 

It  will  not  satisfy  you  to  have  me  make  these  broad  and  general 
statements  without  giving  some  definite  figures  in  their  support, 
which  I  am  glad  to  do  as  tar  as  possible. 

The  Bureau  of  Statistics  of  Book  Paper  Manufacturers  repre- 
sents about  80  per  cent  of  the  industry;  that  is  to  say,  mills  mak- 
ing about  80  per  cent  of  the  total  tonnage  of  book  paper  report 
to  this  bureau.  My  figures,  therefore,  represent  actual  conditions 
only  with  reference  to  the  80  per  cent;  but  in  order  to  give  you 
a  more  comprehensive  view  of  the  whole  situation,  I  have  estimated 
the  operations  of  the  mills  which  are  not  included  in  the  bureau, 
feeling  it  safe  to  figure  that  the  operating  conditions  of  those  miUs 
are  practically  the  same  as  in  the  others.  The  variation  in  any 
event  can  not  be  considerable,  so  that  the  figures  I  give  you  of  the 
entire  industry,  while  in  part  estimated,  are  approximately  correct. 

During  the  fiscal  year  ending  June  30,  1915,  the  book-paper  mills 
in  the  United  States  produced  in  round  numbers  697,000  short  tons; 
and  let  it  be  understood  that  hereafter  when  I  speak  of  tons  I  always 
mean  the  short  ton  of  2,000  pounds.  The  same  mills  during  the  fiscal 
year  ending  June  30,  1916,  produced  776,000  tons,  an  increase  of 
79,000  tons.  Not  only  was  this  extra  production  of  79,000  tons 
available  for  the  market,  but  the  stocks  oipaper  on  hand  at  the  mills 
within  that  year  were  reduced  25,000  tons,  which  means  a  total  in- 
crease of  104,000  tons  for  the  market  over  the  year  next  preceding. 

Now  you  want  to  know,  of  course,  what  became  of  this  extra  paper 
tonnage.  It  has  been  suggested  by  some  who  are  not  famihar  with 
the  situation  that  the  temptation  to  supply  the  demand  of  foreign 
countries  was  so  great  as  to  induce  the  manufacturer  to  overlook  the 
needs  of  the  American  consumer  and  send  not  only  his  increased  pro- 
duction abroad,  but  hkewise  to  export  additional  paper,  leaving  the 
local  supply  less  than  it  formerlv  was.  The  facts  are  these:  The 
exportation  of  book  paper  from  tne  United  States  during  the  fiscal 
year  ending  June  30,  1916,  amounted  in  round  numbers  to  21,000 
tons  more  than  for  the  year  next  preceding.  These  figures  are  taken 
from  the  Grovernment  reports.  Therefore,  if  increased  production 
and  reduced  stocks  amounted  to  104,000  tons,  and  exports  increased 
only  21,000  tons,  the  domestic  market  was  supphed  for  its  own  use 
83,000  tons  more  during  the  last  year  than  during  the  former, 


4 


96 


BOOK-PAPEB  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


97 


It  maysurpnse  you  to  learn  that,  in  spite  of  all  we  have  heard 
about  sending  paper  out  of  the  country,  the  entire  amount  of  book 
paper  exported  dunng  the  year  ending  June  30,  1916,  was  only  36,000 
to^  which  was  less  than  half  the  increased  production 

rhat  It  was  consumed  goes  without  saying,  which  demonstrates 
what  1  have  ah-eady  stated,  that  local  consumption  has  enormouslv 
mcreased.     Mark  you    also,  that  these  figures  do  not  take  into  ac- 
count the  reduction  of  stocks  on  hand  with  the  jobbers  or  pubhshers 
It  IS  my  opimon  that  if  this  loss  were  also  estimated  the  increased 

??^^.^1^^I?^''°'P^'^^  '^  ^^^  ^^^^^  States  would  amount  to  somethincr 
like  100,000  tons.  *^ 

I  would  also  caU  your  attention  to  the  fact  that  this  last  fiscal  vear 
m  which  the  increased  production  is  noted  began  with  the  1st  of 
July  1915,  whereas  the  demand  did  not  make  itself  materiallv  felt 
until  toward  the  close  of  the  year,  some  four  or  five  months  later. 
Iherefore  the  average  increase  for  that  fiscal  year  was  not  equal  to  the 
increase  of  production  and  consumption  as  we  have  had  it  in  recent 
months. 

Why,  you  ask,  is  more  paper  being  consumed  than  formerlv« 
Ihis  ciuestion  you  can  answer  as  readily  as  I.  The  fact  is  that  the 
American  people  are  busy  and  paper  consumption  always  increases 
with  increased  business. 

It  may  occur  to  you  to  inquire  why  at  the  prices  now  offered  the 
imlls  are  not  producing  and  marketing  more  paper  and  reUeving  the 
situation  with  the  pr^es.  They  are  not  doing  so  simply  because  it 
IS  a  physical  impossibiity,  the  impression  of  some  to  the  contrarv 
notwithstanding.  I  beheve  I  am  perfectly  safe  in  saying  that  no 
industry  has  ever  tned  harder  to  supply  the  market  demani  than  the 
paper  manufacturers  are  now  trying,  and  I  think  the  figures  wiU  bear 
me  out  m  the  statement  that  this  effort  has  not  only  been  an  earnest 
one,  but  hkewise  an  efficient  one. 

During  the  greater  part  of  last  year,  as  well  as  for  a  long  period 
previously  the  productive  capacity  of  the  American  mills  exceeded 
the  market  requirements.  'There  was  not  only  idle  equipment  in 
the  mills,  but  there  being  no  necessitv  for  forcing  production,  some 
miUs  apparently  acqmred  the  habit  of  loafing.  They  were  not  getting 
^  w    ^^^  niaximum  capacity  because  nobody  wanted  it 

With  the  mcreased  demand  the  mills  put  all  their  equipment  into 
operation,  and  have  brought  it  aU  up  to  the  highest  possible  state  of 
efeciency.  They  have  hkewise  managed  to  get  the  best  possible 
results  out  of  their  operation,  which  is  shown  by  the  increased  ton- 
nage put  on  the  market  in  spite  of  the  fact  that  no  new  mills  were 
constructed  or  new  machines  added  within  the  period  considered 
in  other  words,  the  increased  production  was  gotten  out  of  the  old 
eompment,  considerable  money  being  expended  in  adding  to  its 
emciency.  ° 

It  is  beyond  the  limits  of  human  expectation  to  accomplish  more 
m  the  direction  of  increased  production  for  the  time  being  than  has 
akeady  been  accomplished.  This  is  fully  demonstrated  bv  the 
reports  made  to  the  Bureau  of  Statistics.  At  the  beginning  of  the 
last  mentioned  fiscal  year  the  book  paper  mills  in  the  United  States 
were  losing  on  the  average  about  16  per  cent  of  their  time.  In 
estimating  this  percentage  we  do  not  consider  the  time  which  is 
unavoidably  lost  on  account  of  the  interruptions  incident  to  regular 


and  normal  manufacture,  such  as  changing  orders,  changing  wires 
and  felts,  time  lost  by  paper  breaking  on  the  machines,  and  other 
items  of  that  character.  The  16  per  cent  which  we  figure  lost  was 
the  additional  time  which  the  mills  might  have  been  operated  had 
they  been  supplied  with  sufficient  business  to  justify  it. 

About  the  first  of  September  of  last  year  the  demand  began  to 
increase  and  so  continued  up  to  the  present  time.  The  mills  at 
the  same  time  increased  their  operations  with  the  demand  until 
the  maximum  was  reached;  and  there  has  been  no  falling  back 
that  could  be  avoided.  Since  the  first  of  March  of  the  current 
year  the  book  paper  mills  in  the  East  have  run  97  per  cent  of  the 
tii.ie  continuously.  That  is  to  say,  counting  24  hours  to  the 
working  day  ancl  6  days  to  the  week,  they  have  on  an  average 
lost  but  3  per  cent  of  the  actual  time;  which  loss  is  accounted  for 
entirely  by  accidents  requiring  repairs,  shortage  of  supplies,  trans- 
portation difficulties,  labor  troubles,  and  other  things  too  numerous 
to  mention.  Ordinarily  an  industry  which  operates  90  per  cent  of 
its  capacity  in  prosperous  times  is  thought  to  be  doing  well. 

The  western  mills,  on  account  of  strikes  and  floods,  were  pre- 
vented from  doing  quite  so  well,  but  they  lost  not  a  minute  that 
could  be  avoided. 

Not  only  has  the  record  so  far  as  time  is  concerned  been  excel- 
lent, but  the  tonnage  produced  indicates  the  efficiency  of  equip- 
ment and  management.  The  mills  in  previous  years,  when  demand 
was  slack,  had  not  been  able  to  demonstrate  what  they  could  actu- 
ally do  when  forced.  The  capacity  ratings,  therefore,  have  proven 
to  have  been  low,  but  in  spite  of  some  revisions  of  these  ratings, 
the  average  production  throughout  the  last  seven  months  has  been 
above  100  per  cent  of  the  rated  capacity  of  all  the  mills  and  this  in 
spite  also  of  the  further  fact  that  some  of  the  western  mills,  those 
at  Kalamazoo,  Mich.,  were  seriously  interrupted  by  floods  and 
strikes. 

That  the  increase  in  consumption  of  book  paper  has  been  so 
considerable  may  be  a  matter  of  surprise  to  those  of  you  who  have 
not  taken  the  pains  to  investigate  the  question.  A  number  of  pub- 
lishers have  expressed  to  me  a  doubt  that  there  had  been  any  in- 
crease in  demand,  basing  that  conclusion  largely  upon  their  own 
experience.  The  trouble  is  that  most  publishers  oi  -large  period- 
icals over-estimate  their  relative  importance  in  the  trade;  appar- 
ently believing  that  they  require  the  greater  part  of  the  book  paper 
produced.  Such  is  not  the  case.  I  do  not  nave  the  exact  figures 
at  hand,  but  it  is  safe  to  say  that  more  than  50  per  cent  of  the  book 
paper  goes  to  the  small  dealers  and  consumers  and  not  to  the  big 
periodicals,  and  it  is  in  this  diversified  and  special  use  of  paper 
that  there  has  been  the  greatest  increase  in  consumption. 

The  question  is  sometimes  asked  what  the  manufacturers  are 
doing  to  meet  this  increased  demand  and  why  they  were  not  pre- 
pared for  it  when  it  came.  There  was  indeed  no  reason  whv  they 
should  be  prepared,  but  every  reason  to  the  contrary.  In  tlie  first 
place,  the  paper  maker  did  not  know  it  was  coming  any  more  than 
you  knew  it.  He  did  not  have  the  gift  of  prophecy  by  which  to 
iforecast  the  great  European  war,  nor  did  he  know  of  the  tremendous 
increase  in  domestic  business  which  we  have  experienced. 

12159°— S.  Doc.  79,  65-1 7 


>? 


98 


BOOK-PAPER   INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


99 


For  years  his  equipment  had  been  more  than  equal  to  the  demand 
and  there  was  nothing  to  indicate  a  necessity  for  better  preparation. 
Moreover  everything  which  has  been  done  by  our  public  offici  Is 
and  by  l;  ederal  legislation  in  recent  years  has  directly  discouraged  the 
further  investment  of  money  in  paper-producing  equipment  in  the 
United  btates.  The  daily  press  demanded  such  policy  and  its  voice 
was  heard.  We  were  told  by  the  daily  press  that  this  country  could 
not  take  care  of  the  trade  in  the  future  and  that  the  market  must  be 
broadened  by  giving  them  the  opportunity  to  buy  elsewhere.  That 
opportunity  was  given  and  all  the  paper-producing  countries  of  the 
world  were  invited  to  enter  and  occupy  the  American  mart.  The 
result  has  been  that  m  recent  years  new  mills  have  not  been  con- 
structed nor  new  machines  added  to  any  extent.  A  great  deal  of 
money  has  been  spent  in  bringing  existing  equipment  up  to  the 
highest  standard  of  eii-ciency  that  it  might  survive  the  sharp  com- 
petition ol  foreign  producers.  Inasmuch  as  the  trade  was  ]ookin<T 
elsewhere  for  its  supply,  the  increase  in  equipment  has  been  elsewhere! 

Illustrating  just  what  has  happened,  I  quote  from  a  letter  recently 
written  by  the  editor  and  publisher  of  the  National  Republican  a 
paper  printed  m  .Aluncie,  Ind.,  and  addressed  to  the  American  News- 
paper Publishers  Association.  In  discussing  the  paper  situation 
this  publisher  says :  o  r-  r 

fh^!nl^^  movement  for  free  trade  in  paper  wa.s  fostered  by  your  organization  under 
t/uliliTr^^^T  ^  ^^^^  >^^"'  presicfent  Mr.  Ridder,  that  I  considered  U  un^e 
and  unpatr  otic  for  American  newspapers  to  2is\  for  prix  ileges  in  the  matter  of  tariff 
discrimination  and  that  the  ultimate  effect  of  it  would  be°to  destroy  the  American 

lTnl^lZ"'"i'^'^'Vr^'^'\^'^'''''^^  newspapers  to  the  exactions  of  foreign  combT 
nations,  and  ultimately  would  inr-rease  the  price  of  paper  ^uui"i 

tZ^^JI^  happened.    The  growth  of  the  Amerir-an  print^paper  industry  wa^  arrested 
The  pr^ce  on  paper  was  never  lowered,  except  perhaps  to  sorne  important  newspapers 
by  the  '  anadian  manufacturers  an  ious  for  this  legi!slation.     Thi  bui]ding  of Tmert 
can  paper  mills  was  stopped.     Millions  of  dollars  of  American  monev  ha^ve  gone  to 

^./.H  r  f  Taa^""  '^u'^'^'y  ^^  ^^^  ^^P^'^^  °^  American  industry,  ,'anada  Recipro- 
cated by  forbidding  the  exportation  of  Rulp  wood  from  Crown  lands.  ^ 

This  sums  up  the  situation,  and  I  submit  that,  having  declared  the 
desire  to  procure  their  requirements  from  foreign  sources,  it  is  not 
fair  now  to  blame  the  American  producer  for  his  inability  to  supply 
the  demand  when  these  foreign  sources  fail.  " 

This  statement  is  made  without  intending  that  it  should  have  any 
political  significance,  for,  so  far  as  the  paper  industry  is  concerned 
It  has  received  the  same  kind  of  treatment  from  both  parties  and  is 
^^er  no  obligation  to  either  for  favoi-s  conferred. 

But  what  are  the  manufacturers  doing  to  meet  the  future  demand  « 
VVhat  can  they  do  prudently?  In  the  first  place,  it  requires  a  lon^^ 
tune  under  ordmary  conditions  to  build  and  equip  a  paper  miQ  o? 
even  to  add  a  paper  machine.  Now,  it  is  unpossible  to  procure  such 
equipment  m  any  reasonable  time  or  at  any  reasonable  price.  To 
enlarge  a  mill  at  this  tune  means  paying  double  for  expensive  ma- 
chinery, without  any  guaranty  of  its  delivery  within  less  than  a  year 
perhaps  not  tlien  without  any  assurance  whatever  that  there  will  be 
win  n^  'l  ^^'l  delivered.  These  abnormal  conditions  can  not  and 
will  not  always  last.  The  productive  capacity  of  the  .\merican  mills 
exceeded  the  demand  before  the  European  war  began  and  will 
probably  exceed  it  again  when  that  war  ends,  without  increasincr  the 
number  of  plants  or  enlarging  the  old  ones.  Why  then  should°any 
one  invest  money  upon  an  outlook  so  unpromising  as  to  return  ? 


t 


When  we  come  to  discuss  the  present  prices  at  which  book  papers 
are  selling  there  is  nothing  definite  which  I  can  state  more  than  you 
already  know,  but  there  are  some  things  to  which  I  would  call  your 
attention. 

The  prices  which  we  hear  quoted  and  upon  which  the  public  bases 
its  belief  that  all  the  paper  manufacturers  are  fast  getting  rich,  apply 
only  to  spot  sales.  It  is  my  opinion  that  fully  one-half  of  the  book 
paper  going  to  the  trade  to-day  is  being  delivered  under  contracts 
made  last  year  when  prices  were  at  the  minimum  and  at  a  rate 
considerably  less  than  that  which  could  now  be  obtained  for  the 
materials  used  in  the  manufacture.  Therefore,  the  average  returns 
for  paper  to-day  do  not  begin  to  be  what  they  might  be  made  to 
appear  from  quoting  the  highest  prices  at  which  spot  sales  are  made. 

I  do  not  know  what  the  market  price  of  paper  is  to-day.  I  do 
not  believe  anyone  knows,  because  it  is  so  variable.  Neither  do  I 
know  the  cost  of  production,  except  in  the  general  way  that  must 
appear  to  everybody  that  this  cost  has  greatly  increased.  It  does 
not  happen  to  be  my  duty  or  privilege  to  haye  any  voice  in  deter- 
mining these  matters;  but  I  do  know  that  practically  everything 
entering  into  the  manufacture  of  paper  has  pdvanced  by  leaps  and 
boimds,  as  has  the  labor  which  is  required  in  the  manufacture. 
Basing  sales  entirely  on  cost  of  manuiacture  wouM  mean  a  big 
increase  in  the  price  of  paper.  But  I  do  not  pretend  to  declare 
that  the  increased  price  of  paper  is  measured  by  the  increased  cost 
of  production,  for  I  do  not  know. 

There  seems  to  be  a  feeling  among  publishers  particularly  that 
any  increase  in  the  price  of  paper  to-diy  over  what  it  was  12  or  18 
months  ago  should  in  any  event  be  limited  to  the  actual  increase  in 
the  cost  of  production;  and  it  is  even  declared  by  some  that,  for 
the  sake  of  making  it  as  easy  as  possible  on  the  consumer,  the  manu- 
facturer should  bear  a  part  of  the  increased  production  cost  without 
passing  it  on  to  the  buyer. 

In  the  first  place,  it  does  not  follow  that  under  the  ordinary  rules 
of  either  ethics  or  commerce  the  market  price  of  a  commodity  should 
never  advance  more  than  the  increase  in  cost  of  manufacture.  This 
might  be  true  if  it  were  agreed  that  the  producer  is  entitled  to  ask 
and  permitted  to  receive  a  price  for  his  goods  which  will  at  all  times 
and  under  aU  circumstances  guarantee  a  reasonable  profit  in  return 
for  his  investment  and  diligence,  basing  such  profit  upon  the  varying 
cost  of  the  article  he  manufactures.  In  other  words,  the  limitation 
of  a  profit  might  be  entirely  reasonable  and  just  if  its  procurement 
is  continuous  and  unfailing.  The  dividend,  if  limited,  should  like- 
wise be  guaranteed.  It  is  not  fair  to  fix  a  maximum  return  without 
at  the  same  time  fixing  a  minimum,  for  if  there  are  violent  fluctua- 
tions in  one  direction,  it  requires  like  fluctuations  in  the  other  t(r 
equalize  the  situation. 

When  men  invest  a  large  amount  of  money  in  an  industrial  enter- 

Erise,  it  is  in  most  cases  so  invested  not  with  reference  to  what  may 
e  accomphshcd  in  any  particular  year,  or  even  a  short  term  of 
years,  but  solely  with  respect  to  the  lesults  of  continuous  operation 
over  a  long  period  of  time;  therefore,  the  average  condition  is  the 
one  upon  which  the  prudent  man  must  figure.  In  manufacture,  as 
in  everything  else,  the  high  tides  must  take  care  of  the  low  tides. 
The  prosperous  seasons  must  provide  a  reserve  for  the  dull  times. 


>* 


!i 


100 


BOOK-PAPER  INDUSTRY. 


This  IS  a  well-recognized  principle  in  all  commercial  life.  It  is 
because  men  do  not  expect  to  be  able  every  day  of  their  lives  to 
enjoy  an  income  sufficient  to  meet  their  requirements  that  thev 
deposit  their  surplus  in  savings  banks,  insurance,  or  other  invest- 
ments as  a  safeguard  against  the  time  of  trouble.  We  ought  to 
make  more  hay  whde  the  sun  shines  than  we  consume,  because  we 
may  need  some  hay  when  it  rains,  and  so  far  as  the  paper  maker 
is  concerned  he  has  had  little  sunshine  in  many  long  years  It 
is  the  same  with  all  business.  If  a  manufacturer  is  not  permitted 
to  make  some  money  m  a  prosperous  year,  from  what  source  will 
he  procure  the  necessary  funds  to  tide  him  over  the  disasters  of 
other  seasons  ? 

It  must  not  be  forgotten  that  year  after  year  paper  manufac- 
turers have  been  selling  their  product  at  an  unreasonably  low  price 
Indeed,  they  have  had  no  voice  in  determining  that  price;  it  has  been 
limited  to  what  they  could  get..  If,  then,  "the  pr^oducer  m^t  seU 
at  what  he  can  get  when  the  price  gives  him  little  or  no  profit  or 
subjects  him  to  a  loss,  why  should  he  not  sell  at  what  he  can 'get 
when  he  is  able  to  recoup  some  of  his  losses,  or  to  help  pay  off  the 
accumulated  obligations  of  lean  years  ?  t'  y  J' 

There  is  no  reason  in  the  world,  though  some  people  seem  to 
think  so,  why  the  paper  business  should  not  be  re-'ulated  bv  the 
same  economic  and  commercial  regulations  that  coatrol  any  other 
legitimate  business  which  is  of  a  private  nature.  Public  utilities 
and  certain  other  enterprises  which  enjoy  special  privileges  con- 
ferred by  the  Government  are,  of  course,  subject  more  o?  less  to 
statutory  regulations  m  the  fixing  of  prices,  aid  when  men  invest 
in  the  stocks  of  public  corporations  they  understand  very  well  at 
the  time  what  the  restrictions  are.  It  is  not  so  with  private  enter- 
prise, which  asks  no  favors  of  the  Goverimient,  such  as  the  ri-ht 
of  eminent  domain.  With  these  private  enterprises  the  law"  of 
supply  and  demand  is  the  natural  and  abiding  price  regulator-  and 
that  law  is  no  respecter  of  persons  or  profits.  When  tKere  is  over- 
production the  manufacturer  must  suffer  the  loss.  When  there  is 
scMit  supply  he  may  perhaps  make  up  that  loss. 

i'or  tne  reason  that  business  fluctuates  from  prosperity  to  dull- 
ness   and  because  it  wdl  always  be  so,  it  is  not  fair,  therefore    to 

T,  ?^  K^V  T^^l  '^^'"^"•i  ^''''^f'^^  ^"PPly  the  price  of  a  commodity 
should  be  limited  to  cost  of  production  plus  a  reasonable  profit,  if "^ 
the  same  tune  such  manufacturers  are  not  permitted  to  have  "cost  of 
production  plus  a  reasonable  profit  when  supply  exceeds  demand 
Economic  laws  and  reg;ulations  must  not  be  suspended  and  modified 
to  meet  a  temporary  situation.  It  is  only  by  their  universd  appli- 
catwn  year  after  year  that  justice  is  done  to  all  by  the  law  of  avem-es 
When,  some  months  ago,  a  considerable  portion  of  the  paper  manu- 
factunng  equipment  m  this  country  was  iSle  and  aU  avrilKpace 
at  the  miUs  and  in  the  warehouses  was  filled  with  the  unsold  over! 
production,  we  did  not  hear  of  any  consumer  suggesthTo^  that  the 

cost  01  production.  When  a  price  was  quoted  to  a  prospective  pur- 
chaser, It  was  usuaUy  met  with  the  reply  that  the  s^me  papelcould 
be  obtamed  elsewhere  for  less  money,  which  reduction  th'^  manufac- 
turer was  obliged  to  meet  or  lose  the  order.  No  one  then  tl^u"ht  of 
challenging  the  right  of  the  consumer  to  get  his  paper  whei^TtVouW 


BOOK-PAPEK   INDUSTRY. 


101 


cost  him  least.  The  same  right  forever  remains  to  the  buyer  of  paper 
or  anything  else.  Why,  then,  should  not  the  manufacturer  liave  the 
corresponding  right  to  sell  his  paper  where  he  can  get  the  most  for  it  ? 

Some  of  us  remember  very  well  that  a  few  years  ago  when  the  news 
print  paper  situation  was  looked  after  by  the  late  John  Norris  in 
behalf  ot  the  American  Newspaper  Publishers'  Association,  he  con- 
tended that  the  value  of  an  article  of  commerce  was  determined  by 
what  ])eople  were  willing  to  give  for  it.  He  insisted  that  the  paper 
manufacturer  was  entitled  to  charge  for  his  product  the  price  at 
which  it  would  sell  at  public  auction,  and  no  more.  To  illustrate  his 
theory,  he  did  actually  on  one  or  two  occasions  make  sale  of  some 
news  print  at  public  auction;  tliis  at  a  time  when  the  market  was 
oversupplied  and  no  one  particularly  anxious  to  bid.  The  sale,  of 
coui-se,  was  made  at  a  low  price,  and  he  made  diligent  use  of  this 
occurrence  when  testifying  before  the  Ways  and  Means  Committee  in 
Washington,  which  was  then  considering  a  revision  of  the  tariff. 
Moreover,  a  great  many  of  the  newspapers  heartily  approved  the  prin- 
ciple for  which  Mr.  Norris  contended  and  supported  him  in  the  presen- 
tation of  his  case. 

If  the  fixing  of  selling  price  by  auction  was  the  right  principle  ^ve 
or  six  years  ago,  it  must  be  so  to-day.  Now,  what  would  happen  if 
the  paper  produced  in  this  country  were  disposed  of  in  that  manner 
at  the  present  time  ?  In  the  first  place,  there  would  be  an  immense 
increase  in  the  tonnage  exported.  Generally  speaking,  the  paper 
famine  is  much  more  acute  in  other  countries  than  it  is  in  the  United 
States,  and  foreign  buyers  are  much  more  ready  to  advance  the  price 
than  domestic  consumers.  Orders  are  being  received  every  day  from 
exporters,  accompanied  with  offers  of  most  tempting  figures.  Many 
orders,  indeed,  are  sent  in  stipulating  only  the  delivery  of  the  paper 
and  leaving  the  price  to  be  fixed  by  the  manufacturer.  Most  of  these, 
though  so  inviting,  are  rejected  for  the  reason  that  American  manu- 
facturers as  a  rule  are  inclined  to  take  care  of  the  home  trade  in  pref- 
erence to  the  foreign  and  are  for  that  reason  selling  their  product  to 
domestic  consumers  for  less  money  than  they  could  get  abroad.  If 
it  were  the  practice  to  sell  to  the  highest  bidder,  there  would  be  a 
great  deal  more  complaint  of  paper  famine  than  there  is  now,  and 
prices  would  be  substantially  higher. 

Manufacturers,  indeed,  are  not  fixing  any  price  to-day,  as  a  rule. 
They  are  not  offering  their  product  for  sale,  because  more  requests 
for  paper  are  voluntarily  made  of  them  than  they  can  meet.  The 
prices  at  which  such  paper  as  is  not  already  covered  by  contract  is 
being  sold  and  which  we  hear  quoted  are  simply  the  prices  consumers 
are  offering  and  perfectly  willing  to  pay. 

The  present  unusual  situation  can  not  always  last.  If  for  the  time 
being  the  American  manufacturer  of  paper  is  able  to  make  up  some- 
what for  his  loss  of  profits  in  past  years  of  depression,  or  even  to  lay 
aside  a  reserve  to  meet  the  market  decline  which  will  surely  confront 
him  in  the  future,  it  is  only  fair  and  right  that  he  should  be  permitted 
to  do  so.  It  matters  not  how  much  out  of  proportion  the  present 
return  on  investment  may  seem  to  be,  if,  indeed,  there  is  any  reason 
for  such  appearance,  he  has  for  so  long  been  in  the  throes  of  a  slump 
that  in  the  end  his  financial  batting  average  will  not  be  above  normal. 


(  ; 


1'^ 


wmam 


BOOK-PAPER  INDUSTRY. 


103 


Exhibit  3. 


THE  PAPER  SITUATION-. 

ToTTEDpIpi.lfn^^'''''^''  THOMSON,  SALES  MANAGER  CHAMPION 
FRANK^TV  rfL  """  HAMILTQN,  OHIO,  DELIVERED  BEFORE  THE  BEN 
FRANKLIN   CLUB   OF  CINCINNATI   OCTOBER   26    1916 

well  as  a  duty  to  offer  as  fiill  nn  »til„     .*     '      ^^^  .l\  *  pleasure  as 
that  have  lecf to^hr^r^:!;^? sUuSn"''""  "  ^^'"^''^  "^  '^^  ^^^^ 

pennv  when  hp  ^japq  fV.r.  ^-r^*        i    \-        -^  uebire  lo  turn  an  honest 
•T^^IY  i.  ^^^  "^*  ''^^^  chance  since  the  nanio  of  l  on? 

an^'idTatf'LlSy'^^'tfc^^  was  President,  he  conceived 

said)      This  httteL^'iarwordTt^o  thVeff""'that''Xth''eft 

practicaiiy  every  other  nation  on  earth    "'^"'^^-''^''''^     ^ause  to 

Ine  immediate  result  of  this  P-entlA  "Inirn +or^"  1.  i    .   . 

tion  under  President  T«ft  v^  ft  ^^P     ^^  ^^  admimstra- 


mills  in  this  country  making  book  paper  than  there  seemed  customers 
to  use  the  paper,  there  was  in  a  short  time  a  very  pretty  state  of 
demoralization  in  our  paper-manufacturing  business.  To  complete 
the  picture,  our  astute  Canadian  friends,  having  already  been  pre- 
sented with  the  news-paper  manufacturing  business  of  the  United 
States  by  the  United  States  Government,  very  cleverly  have  decided 
to  make  the  situation  a  little  more  "air-tight^'  by  arranging  to  put 
an  export  duty  on  any  pulp  wood  exported  to  this  country  from 
Canada,  thus  further  increasing  the  domestic  cost  of  production. 

I  am  reciting  this  tale  of  woe,  not  to  ask  your  sympathy,  but 
merely  as  an  explanation  of  the  decline  in  paper  and  pulp  manufac- 
turing in  the  United  States.  The  Cana'dian  Government  has  shown 
us  the  courtesy,  in  return  for  our  kindness,  of  raising  the  duty  into 
Canada  from  25  to  35  per  cent.  Wich  unimportant  exceptions,  there 
has  been  no  increase  in  our  paper  and  pulp  capacity  since  this  body 
blow  was  struck.  During  the  succeeding  years  many  mills  have  been 
built  in  Canada  by  American  as  well  as  Canadain  capital,  and  many 
American  workmen  have  emigrated  to  Canada  to  help  operate  them. 
When  the  reciprocity  treaty  was  ofFv3red  to  Canada,  we  were  import- 
ing from  that  country  about  100,000  tons  of  news  print  yearly.  This 
year  we  wiU  import,  if  we  maintain  the  present  rate,  over  1,100,000 
tons.  Is  it  any  wonder  that  when  the  United  States  publisher  of 
newspapers  turns  to  the  domestic  manufacturer  of  news  print  with 
request  for  low  prices  and  quick  deUveries,  the  latter  may  be  a  little 
inclined  to  point  across  the  border  and  say,  "Let  George  V  do  it," 
for  had  it  not  been  for  the  reciprocity  treatv  which  led  to  the  Cana- 
dian invasion  of  news  paper  and  pulp,  which  by  reflex  action  caused 
the  great  overproduction  of  book  paper  in  this  country,  I  can  see  no 
reason  why  the  domestic  manufacturers  should  not  have  made  their 
usual  annual  increases  in  capacity,  which,  up  to  that  time,  had 
amounted  to  about  10  per  cent  per  year.  Such  an  increase,  con- 
tinued up  to  the  beginning  of  the  European  war,  would  have  given 
the  United  States  a  paper-producing  capacity  which,  although  it 
might  not  have  entirely  covered  our  present  needs,  would  certainly 
have  prevented  the  price  from  rising  to  present  or  soaring  to  the 
higher  figures  which  seem  imminent  in  the  immediate  future. 

The  sulphite  pulp  situation  is  almost  identical  when  the  favored 
nations  clause  automatically  removed  the  duty  of  one-eighth  to  one- 
fourth  cent  per  pound  from  sulphite  pulp,  the  imports  from  Scandi- 
navia increased  just  as  newspaper  imports  had  from  Canada,  from  a 
small  beginning  per  month  we  nave  increased  until  at  the  beginning 
of  this  year  we  were  bringing  in  40,000  to  45,000  tons  per  nionth.  The 
domestic  capacity  has  suffered  accordingly,  so  that  it  is  little  wonder 
than  when  this  half  million  tons  of  imported  pulps  has  been  nearly 
shut  off  by  the  exigence  of  war,  the  domestic  producer  is  unable  to 
meet  the  sudden  and  fierce  demands  upon  his  product. 

You  may  ask  why  he  does  not  increase  his  capacity,  but  that  is  not 
possible  in  the  first  place,  nor  are  these  same  producers  unmindful  of 
the  conditions  prevailing  before  the  emergency;  they  know  that  as  yet 
no  provisions  have  been  made  to  place  them  in  any  better  position  to 
meet  foreign  competition  than  existed  before  the  opening  of  hostilities. 
They  have  seen  the  fate  of  the  Louisiana  sugar  planters,  who  were 
offered  as  a  living  sacrifice  to  cheap  sugar  by  the  present  administra- 
tion, and  it  is  doubtful  if  many  domestic  paper  manufacturers  would 


4 


^ 

TM 


tMI 


104 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


105 


Satfh?vl^ou?d*p^l7"*Pu*  ""^^^^they  '^o«y  do  it  with  the  assurance 
t^!ll^  Jf  tk  ^^"^  ™*''^  '^"''"g^  *'°  pay  tlie  cost  plus  a  profit  before 
w„..M  V,  *^«7*i:  °'  were  guaranteed  that  the  industry  in  this  countrv 
would  hereafter  be  afforded  a  reasonable  and  uniform  degree  of  nro 

leT  me'savTha  T^  '°  '^  disparaging  Mr.  Taft's  adSt?X 
let  me  say  that  the  paper  manufacturer  in  the  United  States  hai 

Tr,  nnw  T  "^  ^'>^}  «??.««  i"  ^^r  administration,  and  the  one  now 
m  power  has  just  made  a  httle  change  in  the  tariff  which  will  aUow  aU 
pulp  and  paper  ydued  at  5  cents  per  pound  or  under  to  Tomf^n  frS 
of  duty,  instead  of  on^y  2  cents,  as  provided  by  our  former  adi^nTs 
tration  I  mention  this  only  that  you  may  fiave  a  perfectlvTear 
understanding  as  to  why  the  domestic  manufacturer'^hS^  hesitated 
~e's:L*reT|eTcy''^  ""P^''''^'  ^"^^  ^"^^  >^«  -"  -^  ^'^^'e^rfol 

thel^TrotU'^La"^^^^^^^^^^  ^^.^^o  fe  tr^ 

abroaa.  I  am  not  argumg  either  for  free  trade  or  a  high  tar?^  K 
can  not  refrain  from  caUing  your  attention  to  the  fact  tiat  manV  con 
supers  wiD  pay  out,  for  paper,  for  instance,  during  the  duratfon  of 
this  war,  more  money  than  they  have  saved'on  implrte  during  °Wr 
previous  business  lives.  The  only  saving  feature,  however  fs  Xt 
the  money  they  pay  to  us  domestic  manufacturer  will  star  at  hom! 
and  our  customers  will  at  least  have  a  sporting  chance  to  Jefit  Cck 
again  from  us  after  the  war.  ^  ^^ 

Just  how  much  cheaper  paper  would  be  to-day  if  our  manufactnrBPo 
had  not  been  "man  handled'^ so  much,  I  am  not  preS  to  sat  W 
I  believe  that  a  very  substantial  saving  would  ha?e?esuUed  an  J'tha 
many  vexatious  delays  on  deliveries  would  have  been  avdded      I 
beheve  that  m  the  long  run  the  American  consumer  is  safer  in 'the 

Sr  IVoth^er  ^  Whethe??),'""'^''  *^^!i  ??  ^r '^'^'^'^  °^  Scan^nav  an 
t       u?.v  Whether  the  war  and  its  drastic  experiences  havp 

ta,^ht  the  consumer  this  lesson,  we  can  not  know  at  present 

Let  me  tell  you  frankly,  in  the  first  plajce,  that  paper  has  been  selling 
dTeSrtSdto  t^^e"%':^lr"^''^  yeak  for^reLnslia  I  havf 
ptloS W^rsS'?^-  th^^J.Toi'ard"  SlT  t  m^a^rri  t 
ft^s  Wr"  ""^'^  '"""^'  ^'^'^  '  **""«-  •'  ^I  b™  mSetZfot 

f-he  only  thing  which  could  possibly  bring  the  price  of  naoer  back 
to  Its  former  figures  would  be  a  revolution  in  the  price  of  wSes  in  «11 
our  industries  which  history  teaches  us  is  not  hkely  to  oc^uf 

I  have  tried  to  impress  upon  the  paper  trade  of  this  countrv  tbp 
value  of  buying  their  paper  uniformly,  Vhereas  a  matter  of  fac^  the 

sp^mldir  Whtn^trP""'"^  "^  *^  ^r?«*"  ^^'-  »^a«  been  ent  rety 
!,^tf  f  n  Tu  *be  war  opened  we  had  a  short  period  of  deore^^ 
sion    followed  by  a  wild  scramble  for  paper  wWcli  iZed  s™i 

hX^\  "fr  '^i'  ^""°^«^  ^y  ^-^"'l^^^  P«"°d  of  den  elsfon  caused 
by^h.^ehe/of  the  consuming  trade  that  paper  had  reached  its  apex 


We  have  had  three  of  these  scrambles  since  the  beginning  of  the  war 
and  are  about  due  for  another,  and  the  paper  manufacturing  trade  is 
in  a  very  poor  condition  to  meet  it. 

The  natural,  in  fact  the  inevitable  result,  has  been  sudden  rises  in 
the  price  of  paper  which  could  have  been  partially  avoided  by  sane 
buymg  for  actual  needs  only,  instead  of  keeping  the  whole  country 
waiting  until  the  last  moment  and  then  everybody  closing  in  on  the 
manufacturers  at  once.  .... 

Paper  being  a  universal  commodity  and  a  necessity  to  civilization, 
I  feci  that  those  who  are  consumers,  as  all  of  us  are,  have  a  moral 
right  to  know  why  paper  has  more  than  doubled  in  price  for  every 
reason  aside  from  the  inability  of  the  United  States  jnills  to  take 
care  of  even  the  domestic  consumption. 

You  have,  of  course,  heard  so  repeatedly  of  the  increase  in  the  cost 
of  chemicab,  pulp,  labor,  coal,  and  other  articles  which  go  into  the 
manufacture  of  paper  that  a  repetition  might  tire  you. 

I  feel  that  you  should  know,  however,  specifically  just  how  great 
this  increase  in  cost  has  been  as  far  as  I  am  able  to  give  you  the 
information  and  that  wages  is  one  of  the  chief  factors  aside  from  pulp. 

During  the  latter  part  of  1915  bleached  sulphite  pulp  sold  at  a 
universal  price  of  $2.75  per  hundredweight.  It  is  always  sold  on  the 
basis  of  10  per  cent  moisture  content,  which  would  make  the  net 
price  as  it  is  put  into  the  beaters  at  the  paper  mill,  approximately  3 
cents  per  pound.  To-day  this  same  pulp  is  commanding  8  cents 
per  pound,  and  as  it  contains  10  per  cent  of  moisture  it  is  necessary 
to  add  80  cents  per  hundredweight  to  the  price  instead  of  27J  cents 
as  was  necessary  when  the  price  was  2}  cents,  in  order  to  arrive  at 
the  net  price. 

The  reason  that  sulphite  has  advanced  to  this  extent  is  primarily 
on  account  of  the  shutting  off  of  the  imports  of  Scandinavian  pulp. 
We  have  been  importing  for  several  years  a  gradually  increasing 
tonnage  until  during  the  last  six  months  of  1915  and  the  first  three 
mont£  of  1916  we  were  bringing  in  approximately  45,000  tons  per 
month  from  Sweden  and  Norway.  In  April  this  volume  of  imports 
commenced  to  shrink  and  by  July  it  had  gotten  down  to  approxi- 
mately 10,000  tons  per  month.  Last  week  there  was  only  1,000 
tons  of  Scandinavian  pulp  brought  in,  or  about  one-tenth  of  the 
normal  supply.  This  Scandinavian  pulp  is  nearly  aU  unbleached 
and  the  market  to-day  is  approximately  6|  cents  per  pound,  whereas 
late  in  1915  the  same  pulp  could  have  been  bought  for  $1.90  per 
hundredweight.  It  is,  of  course,  little  wonder  that  there  have  been 
advances  in  the  price  of  paper  made  from  such  costly  pulp. 

The  advances  in  the  prices  of  chemicals  have  been  very  much 
more  spectacular,  and  adequate  supplies  are  still  not  obtainable  at 
any  price.  Rosin  has  advanced  from  $3.50  to  approximately  $6  per 
barrel,  and  there  is  about  IJ  per  cent  of  rosin  in  all  book  paper. 
Alum  has  more  than  doubled  in  price,  going  from  90  cents  per  100 
pounds  to  a  little  over  $2.  Bleach,  colors,  etc.,  have  also  made 
the  balloon  ascension. 

Before  the  war  many  of  the  domestic  paper  mills  were  buying  their 
fourdrinier  wires  from  Scotland  and  Germany,  and  the  domestic 
miUs  were  curtailing  their  output  from  20  to  35  per  cent  in  conse- 
quence, simply  because  they  could  not  meet  the  competition  of  the 
foreigner  based  on  his  lower  cost  of  labor.     Naturally  the  domestic 


fvi 


I 


106 


BOOK-PAPER   INDUSTRY. 


paper  mills  had  to  buy  their  wires  in  the  cheapest  market,  just  as 
they  have  always  expected  the  paper  consumer  to  do.  The  reuslt 
however,  was  decidedly  without  benefit  to  either  the  paper  m^t 
facturers  or  the  wire  weaver,  as  times  were  so  bad,  because  of  the 
enormous  importations  of  various  commodities,  that  the  paper  manu- 
facturer was  unab  e  to  run  full,  so  that  the  only  beneficiary  S  the 
importations  of  wires  were  the  Scottish  and  German  w^e  weave^ 
who  ran  merrily  full  whOe  the  domestic  weavers  were  shuulnTdown' 
It  IS  at  least  partly  for  this  reason  that  domestic  fourdrinifr  XS 
flLTff""^^^  unobtainable,  as,  of  coui^e,  the  domestic  raver  hS 

wht.h  LT/lf^'"  ^''  Pi^^.^  ^^u^^"  ^^^^  ^^  free-trade  competition 
which  has  taken  place  dunng  the  past  four  years  and  is  not  in  a 
position  to  take  the  business  whic^  hitherto^  went  abroad  Some 
day  the  American  people  will  wake  up  to  the  fact  that  it  is  a  gre™ 
deal  safer  to  have  adequate  facilities  at  home  to  take  care  of  the 
entire  production  of  any  commodity  than  to  buy  the  same  com- 
modity abroad  even  at  a  cheaper  price. 

The  ''high  cost  of  strikes''  must  be  figured  in  the  nresent  price  of 
fsX;  th.m%n?n''.^'''^-^^'  P^Pf  manufacturers  aU  the  credit  that 

havP  TW  ^^^  V'n^  '^^^^^  ^^^  P^^^^  ^^  P^P^^  ^^^^^  than  they 
.^W  .  l^  PracticaUy  no  important  paper  mill  in  the  countrv 

that  has  not  ha5  a  number  of  strikes  during  the  war  period  and 
none  that  have  not  had  to  add  one  shift  to  "their  labor  system  In 
other  words,  to  en^ploy  three  shifts  of  eight  hours  each  to  forr^  a 
fcTt'p^i  f  ^^VTT^^  '^^^  employe/two  shifts  of  twelve  hours 
Th.fih  f  ^^"^  *i^^^  ^^^'^  "^.^"i  ^^^^^^^  the  same  pay  for  eight  hours 
that  they  formerly  were  paid  for  twelve  you  can  readily  ggure  the 
enormous  wage  mcrease  of  a  miU  which  formerly  employ^l,200 
but  now  has  to  employ  1,800  to  get  the  same  output 

Another  item  of  increased  cost  in  paper  manufacturing  which 
ordmanly   escapes   attention  is   the   enormously  increased   inTere^t 

Tdav  nnrl""'^  ^1?^  are  made  into  paper.  Manufacturers  must 
to-day  purchase  where  and  when  they  can  and  when  they  have  an 
opportumy  to  buy  a  large  consignment  of  pulps,  claf  or  other 

down.  This  means  that  m  a  plant  producing  200  tons  of  paper  pe? 
wn^Jh  f  ordmanly  would  carry  in  round  figures  about  $1,000,000 
worth  of  materials  m  stock,  that  even  if  they  carried  the  skmp 
amount  of  materials  on  hand  the  value  would  be^overiwice  as  S 
?n  tvffL'^"^''^^/^^  ^^^^'?^  "H"^^  would  be  doubled.     In  addition 

account  of  floods  or  fires,  as  insurance  can  not  be  collected  on  stock 
if  damaged  by  flood  and  only  on  the  actual  purchase  price  in  case  it 
IS  damaged  by  fire,  although  it  may  cost  double  the  amount  of  the 
Durchase  price  to  replace  it,  therefore  the  manufacturer  not  only 
has  the  increased  mterest  charge,  but  stands  liable  to  lose  in  case  o1^ 
a  total  loss  by  fire  $2  000,000,  where  before  he  only  risked  $  ?00r000 
Another  rather  obscure  but  nevertheless  potent  reason  for  the 

for  n«n'  "^  ^^u  ^'''^  ^/  ^^P""  ^  l^^  ^^^^^^^  ^^  ^he  consumer  hTmsdf 
for  paper  to  the  manufacturer.  In  other  words,  the  producer  is  con- 
stantly confronted  with  the  fact  that  his  customer^  are  S^^^ 

mi  &hTZ  ^Y\'^'.  '^^'H''  ^'''''  ^^^  r''^^  d^li^eries.  Efery 
mill  has  haxl  to  decide  for  itself  as  to  whetfier  it  would  accept  Ly 


BOOK-PAPER  INDUSTRY. 


107 


orders  which  were  received  with  a  bonus  attached  for  quick  ship- 
ment. I  am  happy  to  say  that  I  can  ''prove  an  alibi"  to  such  an 
accusation,  but  nevertheless  the  fact  that  many  consumers  are  eager 
to  pay  a  bonus  for  paper  certainly  does  not  work  prices  downward. 
However  unfair  the  practice  may  be,  the  blame  must  be  attached  to 
the  temptor  and  some  credit  should  be  given  to  the  paper  mills  who 
have  resisted  such  attractive  propositions. 

One  of  the  most  creditable  features  that  the  manufacturers  can 
point  to  in  their  conduct  during  the  past  year  is  their  protection  of 
the  domestic  trade  against  the  bidding  of  exporters  and  foreign 
customers. 

The  mills  have  repeatedly  been  favored  with  orders  sent  in  from 
customers  abroad  whom  they  probably  have  never  heard  of,  and  in 
many  case  have  to  consult  an  atlas  before  they  can  locate  the  cus- 
tomer's place  of  business.  I  have  myself  repeatedly  had  to  look  up 
the  names  of  strange  sounding  towns  in  Africa,  Java,  South  America, 
Japan  and  other  foreign  countries  in  order  that  I  might  send  polite 
letters  declining  unsohcited  orders,  amounting  to  a  total  of  at  least 
15  per  cent  of  our  output  for  the  year.  Our  statistical  bureau  advises 
us  that  at  least  one- third  of  the  total  output  of  the  American  book 
mills  could  be  sold  abroad  without  special  solicitation  and  at  prices 
higher  than  the  domestic  consumer  is  paying. 

Apparently  our  domestic  friends  are  not  aware  of  this  good  treat- 
ment, as  there  seems  to  be  a  commonly  held  suspicion  that  a  large 
part  of  the  output  of  our  paper  mills  is  being  exported.  As  a  matter 
of  fact,  out  of  a  total  production  for  this  year  amounting  to  about 
776,000  tons  only  25,000  tons  total  has  been  exported  and  nearly 
this  amount  is  exported  in  normal  times. 

Our  total  exports  of  printed  papers  other  than  news  have  been  as 
follows  during  the  war  period: 

For  the  eight  months  up  to  August  31—1914,  $1,049,000;  1915, 
$1  227,000;  1916,  $1,441,000. 

When  you  consider  the  advances  in  price  it  is  evident  that  the 
exported  tonnage  has  actually  decreased. 

it  is  evident,  however,  that  if  at  any  time  the  domestic  demand 
should  fall  off,  the  manufacturers  could  without  hurting  their  own 
consciences  in  any  way  turn  to  this  foreign  source  of  orders  with 
considerable  profit  to  themselves,  as  the  foreign  demand  is  constantly 
becoming  more  insistent. 

Very  few  people  have  any  idea  how  much  book  paper  is  produced 
in  this  countrv  in  a  year.  During  the  fiscal  year  ending  June  30, 
1915,  the  book-paper  mills  in  the  United  States  produced  697,000 
tons  of  2,000  pounds  each.  The  same  mills  during  the  fiscal  year 
ending  June  30,  1916,  produced  776,000  tons  or  an  increase  of  79,000 
tons.  Not  only  was  this  extra  production  of  79,000  tons  available 
for  the  market,  but  the  stocks  of  paper  on  hand  at  the  mills  within 
that  year  were  reduced  25,000  tons,  which  means  a  total  increase 
of  104,000  tons  for  the  market  over  the  year  1915.  In  fact,  it  even 
means  more,  for  the  mill  stocks  increased  during  the  preceding  year 
in  spite  of  the  low  production.  We  have  no  stock  at  present.  Inas- 
much as  our  exports  increased  approximately  21,000  tons  over  the 
year  preceding,  it  is  evident  that  the  paper  mills  of  the  United  States 
produced  for  the  domestic  trade  83,000  tons  of  book  paper  more  for 
the  last  year's  consumption  than  for  the  former  year.     These  figures 


,'^f 


■■i^ 


108 


BOOK-PAPER   INDUSTRY. 


the   ncreased  consumption  in  the  United  StaL  foV  the  veJmfi 

Ihe  mills  of  the  United  States  are  working  to  full  canaritv  for  tv,» 
a'm  urof  "pa'p^  iTTh.'^*  '"""^  ''''\4  rdlXnt^limiSd 

began  to  increase  and  has  continued  up  to  the  oresent  tfm^    Ti^ 

it  mT.W '°  P^/P^'P"^  times  is  thought  to  be  dofng  well 

fSfirtteir^imeT  1^1^?;  ^  ZT^ 
country  is  busier  than  it  has  ever  been  before  '  **"' 

sprdeuferi^er'lSv^'^/'P'""*"f**  ^■'"  ^"''^  P^'P^'^  '^'•«  '""^tly  for 
cL    o^f^hH  U  c^'-r  L:-?  ^l1At^^!Z  iz 

S^r^-JS  atd^-fhe^r^^nife  ''^7^ ^^^^ 
couz^e  materiaUy  reduces  the  profifs' wh^  hfhe  mUk  ar^'eputed  to 
be  making.     Of  course  these  contracts  will  run  out  eventual v«n^ 
will  not  be  renewed  at  former  prices      Near  v  « II  nf  tht  i        ^    •?■ 
m  the  United  States  have  beenTn^e  habit  of  con/rw  ^^T  ""i"' 

tWon^d't""*  Vlr  '''''  -tp"  t  -i  oV colrs^^l'u^'nltfce^ 
the  conditions  which  have  come  about  during  the  past  six  month! 

nnV^^h  T/"'"*"^  °^  Pu^P^'  h''^^  contenderthaf  any  advances  in 
Ch  .'nn"'''  represent  the  actual  increase  in  the  cost  "^manufacture 

If  Ih.  „.„„(,«u,er  «  lo  b.  coosidieJ  „  h.,?ij  £d  .  to  d.S     ' 


BOOK-PAPER  INDUSTRY. 


109 


Some  idea  of  the  difficulty  that  is  encountered  in  obtaining  the 
necessary  raw  materials  for  paper  manufacture  may  be  of  interest 
to  you.  In  the  first  place  nearly  all  domestic  manufacturers  had 
contracts  for  Scandinavian  pulp  when  the  year  opened;  most  of  these 
contractors  have  failed  to  deliver,  and  it  is  impossible  for  the  Ameri- 
can manufacturer  to  go  over  to  Sweden  to  enforce  delivery  or  sue 
for  damages.  Therefore  he  must  buy  in  many  cases  the  same  pulp 
which  he  has  under  contract  but  pay  for  it  on  the  market  price, 
although  the  paper  which  he  makes  from  the  pulp  may  be  under 
contract  at  a  very  low  price.  We  have  had  the  doubtful  pleasure  of 
purchasing  4,000  tons  of  Scandinavian  pulp  within  the  past  60  days; 
only  about  700  tons  of  this  pulp  has  been  dehvered,  and  we  are  not 
able  to  obtain  positive  knowledge  as  to  when  we  will  receive  the 
balance.  We  feel  that  some  very  expert  trading  around  has  been 
done  on  contracts  under  the  guise  of  war  emergency,  but  of  course 
it  is  impossible  for  the  domestic  manufacturer  to  do  anything  except 
accept  what  pulp  he  is  able  to  obtain  at  whatever  price  he  is  asked  to 
pay  and  to  pass  the  difference  in  cost  on  to  the  consumer. 

A  very  large  tonnage  of  English  china  clay  is  used  in  the  manu- 
facture of  coated  paper.  Ordinarily  this  is  imported  in  small  par- 
cels of  about  1,000  tons,  but  for  a  number  of  months  past  the  ship- 
ments have  been  delayed  and  the  imports  reduced.  We  have  been 
advised  by  our  English  connections  to  import  a  whole  shipload  of 
English  clay,  as  they  said  that  the  imports  would  probably  be  dis- 
continued altogether  for  various  reasons. 

In  order  to  bring  in  a  shipload,  which  would  arrive  with  tolerable 
certainty,  it  was  necessary  to  charter  an  American  vessel.  This  was 
done,  and  5,000  tons  of  English  china  clay  was  imported  in  one  ship. 
Of  course  it  was  necessary  to  build  a  special  building  to  hold  this 
enormous  loose  bulk  of  clay,  and  the  additional  freight  alone  on  this 
item  was  S25,000. 

Before  the  war  the  American  coating  mills  were  in  the  habit  of 
importing  their  casein,  which  is  a  glue  made  of  milk,  largely  from 
France,  but  since  the  war  started  such  supphes  were  shut  oft'  as  the 
French  soldiers  evidently  needed  the  cheese  for  food.  The  conse- 
quence was  a  raise  in  the  price  of  casein  from  the  average  of  about 
7  cents  per  pound  to  any  figure  up  to  28  cents.  This  rise  alone  would 
add  approximately  IJ  cents  per  pound  to  the  price  of  coated  paper. 
The  price  of  good  casein  to-day  is  about  20  cents  per  pound.  As  it 
is  necessary  to  carry  at  least  eight  months'  supply  on  band  in  order 
to  be  safe  it  is  obvious  that  the  mills'  risk  and  interest  charge  on 
this  item  is  at  least  tripled,  and  in  case  of  fire  or  flood  their  suppMes 
would  probably  not  be  replaceable  at  any  price  whatever. 

Taking  it  altogether  the  manufacture  of  paper  to-day  is  not  an 
easy  game,  although  one  that  will  appeal  to  any  man  who  is  fond  of 
excitement  and  who  hkes  to  take  a  few  gambling  chances. 

I  believe  that  the  paper  manufacturers  of  the  United  States  have, 
on  the  whole,  acted  toward  their  trade  in  as  creditable  a  manner  as 
any  list  of  men  in  any  other  business  whatever.  We  have  realized 
that  while  the  present  is  a  seller's  market  that  conditions  will  some 
day  be  reversed  and  that  the  golden  rule  is  to-day  a  good  maxim 
under  which  to  operate. 


BOOK-PAPER  INDUSTRY. 


Ill 


Exhibit  4. 


GENERAL  CONDITIOlSrS  IN  THE  PAPER  TRADE,  AND  THE 
MANUFACTURING  SITUATION  IN  WISCONSIN. 

[The  following  is  a  copy  of  a  report  made  in  April,  1917,  to  the 
president  of  one  of  the  largest  jobbing  houses  in  the  United  States 
on  the  general  conditions  in  the  paper  trade  and  on  the  mannfac- 
turir.g  situation  in  Wisconsin.  Also  letter,  May  25,  1917,  dvin^ 
results  of  further  investigation.]  »  &       6 

We  have  been  hearii.g  alarming  reports  regarding  a- possible 
shortage  of  wood  pulp  and  pulpwood. 

During  the  past  week  scarcely  a  mill  has  stated  the  conditions 
otherwise  than  that  it  was  serious;  that  the  cut  of  wood  has  been 
below  normal;  that  the  usual  shipments  at  tliis  period  of  the  year 
are  far  short  of  normal,  and  the  prospects  of  a  shortage  was  strong. 

*  *  *  *  ♦  :|e 

The  general  talk  is  to  the  eflPect  that  a  shortage  of  wood  would 
seriously  affect  market  conditions  in  the  fall  and  winter  months  but 
analyzing  the  vanous  strtements  and  eUminating  the  superfluous 
it  IS  the  writer  s  opinion  that  the  real  conditions  in  Wisconsin  are 
as  follows : 

Eighty  or  eighty-five  per  cent  of  the  total  pulp  wood  used  in 
Wisconsin  is  composed  of  other  grades  than  spruce,  and  the  15  per 
cent  or  20  per  cent  being  spruce.  Tl  ere  is  no  question  but  the 
supply  of  wood  pulp  now  in  the  yards  of  the  mills  is  far  below  normal 
for  this  time  of  the  year,  but  this  is  accomited  for  by  reason  of  car 
shortage,  rr-ther  than  an  under  cut  of  pulp  wood. 

Hemlock,  jack  pine,  and  balsr.m  can  be  secured  in  abundance  and 
at  all  times  of  the  year.  Wmter  has  been  the  season  for  cutting 
these  grades,  largely,  I  beheve,  because  labor,  harvest  hands,  and 
hke  laborers  could  be  secured  with  less  difficulty  than  in  the  summer 
and  fall,  and  at  a  lower  wrge  scale. 

There  are  no  reasons  why  these  grades  can  not  be  cut  and  trans- 
ported m  the  summer  the  same  as  in  the  winter,  as  nothing  in  the 
topography  of  the  com;try  where  they  grow  precludes  it.  There- 
fore the  normal  quantity  can  reasonably  be  depended  upon,  and  the 
aUeged  shortage  must  necessarily  be  confirmed  to  spruce  pulp  wood 

Let  us  admit  that  only  25  per  cent  of  the  normal  spruce  sup- 
ply has  been  received  to  date,  and  that  the  cut  has  only  been  50 
to  60  per  cent  of  normal  and  that  no  more  can  be  cut  this  year 
but  what  IS  cut  is  delivered.  So  far  as  Wisconsin  mills  are  con- 
ceri.ed,  it  would  mean  only  a  net  shortage  of  from  7h  to  10  per  cent 
of  what  IS  normally  needed.  The  Wisconshi  mills"  can  get  along 
without  any  spruce,  if  necessary,  and  if  necessary  in  lieu  of  it,  usS 
hemlock  and  like  grades,  in  the  manufacture  of  qujJities  which  are 
now  made  entirely  of  spruce,  or  mixed  with  hemlock,  etc.  Such 
110 


papers  might  not  be  up  to  standards,  but  would  be  used,  if  spruce 
pulp  was  snort. 

Most  of  the  mills  using  the  large  quantities  of  wood  pulp  have 
their  own  timberlands,  accessible  to  their  plants,  and  though  talking 
vigorously  about  the  wood  shortage,  are  comfortably  fcced  with 
their  wood  suppUes. 

There  are  some  mills  buying  ground  wood  and  sulphite  pulp  that 
may  possibly  be  compelled  to  pay  high  prices,  especially  if  a  shortage 
of  pulp  actually  exists  in  Canada,  which  is  the  principal  source  of 
supply.  It  is  reported  that  the  cut  in  Canada  is  only  about  60  per 
cent  of  normal;  this  may  be  discoui.ted  to  a  cert'Mn  extent,  but 
probably  not  as  extensively  as  the  reports  on  the  Wisconsin  situa- 
tion, as  almost  the  entire  Canadian  pulp  wood  consists  of  spruce 
which  must  be  cut  and  hauled  to  the  railroad  during  the  frozen 
periods,  on  account  of  the  swampy  coimtry  in  which  it  grows  making 
that  impossible. 

Assuming  a  shortage  in  Canada  exists,  then  its  extent,  and  the 
demand  for  paper  become  important  factors  in  considering  prices. 
There  is  no  doubt  about  the  additional  cost  of  cutting  and  handling 
actually  existing,  as  laborers  two  years  ago  were  paid  $17  to  $20 
per  month  and  board,  and  were  plentiful;  to-day  they  get  $60  to 
$75  and  are  scarce.  Pulp-wood  prices  during  the  same  periods  show 
the  following  comparisons : 

1914:  About  $6  to  $8  per  cord.     1917:  About  $12  to  $16  per  cord. 

Hemlock  produces  800  pounds  of  sulphite  to  a  cord.  Spruce  pro- 
duces 1 ,000  pounds  of  sulphite  to  a  cord. 

When  run  into  ground  wood  pulp,  under  the  present  method  of 
barking,  they  produce  about  a  ton  to  a  cord,  with  a  loss  of  10  per 
cent  shown  in  conversion  into  paper. 

In  Wisconsin  there  has  been  a  steady  increase  in  tht  labor  cost, 
estimated  at  about  40  per  cent  over  two  years  ago,  and  only  recently 
there  have  been  strikes  threatened,  and  agitators  are  stiU  in  the 
Wisconsin  district  trying  to  unionize  and  to  have  wages  advanced. 
One  mill  has  just  fought  out  the  union  question  with  its  employees. 
The  troubles  became  so  acute  that  a  meeting  of  the  employees  was 
called,  and  the  superintendent  told  them  plainly  and  emphatically 
that  they  must  then  and  there  decide  what  they  would  do  about 
Quitting;  that  if  they  wanted  to  report  for  work  the  following  Mon- 
day they  would  be  reinstated,  but  only  upon  condition  that  they  drop 
the  union  question,  and  if  they  did  not  report  the  mill  would  be  closed 
indefinitely.  All  but  thre.  reported.  Other  mills  in  the  Fox  Kiver 
Valley  have  agreed  to  a  further  wage  advance. 

The  costs  of  felts  and  wires  have  also  advanced  again. 

All  things  considered,  there  are  many  reasons  why  prices  should 
remain  firm,  although  there  may  be  a  readjustment  of  some  prices 
on  grades  that  are  now  out  of  proportion  with  others. 

It  is  an  acknowledged  fact  that  most  every  mill  in  the  Wisconsin 
district  needs  orders,  and  that  a  number  of  them  (writing  mills  prin- 
cipally) have  been  down  at  intervals,  and  one  mill  has  not  turned  a 
wheel  for  two  weeks. 

The  mills  all  feel  the  necessity,  because  of  high  costs  of  manufac- 
ture, to  maintain  present  prices,  and  tind  that  less  money  would  be 
lost  by  shutting  down  than  would  be  lost  by  cutting  prices. 


112 


BOOK-PAPER  INDUSTRY. 


BOOK-PAPER  INDUSTRY. 


113 


It  seems  to  be  the  consensus  of  opinion  that  reordering  will  soon 
begin  a^ain.  It  is  felt  that  the  falling  off  in  miU  orders  does  not  mean 
a  like  faUing  off  in  consumption,  but  is  due  partially  to  a  less  consump- 
tion, but  principally  to  jobbers  and  printers  and  consumers  reducing 
the  large  stocks  received  during  the  aviation  period. 

Prior  to  1915  the  mills  were  running  not  to  exceed  75  to  80  per  cent 
of  their  capacity.  During  1916  orders  received  were  equivalent  to 
about  120  to  125  per  cent  of  their  capacity.  The  increase  in  orders 
IS  estimated  on  the  following  division :  Fifteen  per  cent  speculative ; 
10  per  cent  protective;  5  per  cent  foreign  sales;  10  per  cent  increased 
consumption. 

Jobbers,  printers,  and  consumers  stocked  up  heavily.  During  the 
buying  period  stocks  were  generally  increased  from  50  per  cent  to 
75  per  cent  above  normal,  and  kept  on  that  basis  as  long  as  prices 
showed  an  upward  tendency,  and  dehveries  were  slow,  while  the  con- 
sumption was  increased,  according  to  my  estimate,  only  10  per  cent. 

To-day  the  15  per  cent  speculative  and  10  per  cent  protective  have 
entirely  stopped,  showing  a  corresponding  falling  off  of  mill  orders. 

In  addition  to  this,  the  jobbers  and  printers  (the  heavy  buyers 
during  the  aviation  period)  have  been  reducing  their  stocks,  so  that 
the  10  per  cent  covering  increased  consumption  has  also  been  with- 
drawn from  the  mills,  leaving  only  the  5  per  cent  foreign  business 
added  to  1914  consumption  to  sustain  the  mills  during  the  readjust- 
ment period.  Naturally  some— in  fact  most  mills  need  orders,  but 
the  high  cost  of  raw  materials,  labor,  replacements,  etc.,  almost  pre- 
cludes the  possibihty  of  lower  prices. 

The  real  question  is,  How  long  will  present  conditions  continue  ? 
Assuming  the  above  analysis  to  be  moderately  accurate,  it  may  be 
reasoned  that  as  the  heavy  buyers  are  reducing  their  stocks  and 
refraining  from  reordering,  it  is  simply  a  question  of  how  much  they 
increased  stocks  over  normal  periods,  and  whether  or  not  consumption 
is  keeping  up. 

It  is  quite  true  that  some  of  the  high  prices  have  resulted  in  econo- 
mies being  practiced,  but  notwithstanding  that,  I  beheve  the  con- 
sumption to  be  at  least  about  the  same  as  during  the  more  active 
period.  Based  on  this,  practically  a  three  months'  period  of  light 
ordering  has  been  passed,  and  it  is  natural  to  assume  that  within 
30  to  60  days  there  will  be  a  revival  of  ordering  to  take  care  of  the 
present  consumption  and  possible  increased  consumption  in  all  lines. 

There  is  no  fundamental  reason  why  business  should  be  poor;  on 
the  contrary,  there  are  good  reasons  why  the  paper  business  should 
improve. 

Past  history  shows  that  high  prices  and  unusual  business  activity 
follow  a  declaration  of  war.  In  1914  that  principle  in  business  was 
immediately  recognized,  and  come  mills  attempted  to  advance  prices, 
but  at  that  time  it  was  not  a  United  States  war,  and  the  ''war  stim- 
ulant" was  not  felt  until  American  securities  had  been  unloaded  from 
abroad  and  real  money  was  gotten  in  circulation.  This  took  a  year; 
w^l  ^T^^  ^^®  "^^^^  result— an  unusual  activity  and  hi('her  prices' 
V\ith  this  country  now  involved,  will  not  we  again  feel  that  ''war 
stimulant''  when  the  stocks  of  the  jobbers  and  large  printers  are 
unloaded  by  consumption. 

1  believe  we  have  every  reason  to  look  for  it.  Plie  l)uildirig  of  new 
ahips,  both  merchant  vessels  and  battleships,  means  more  steel,  iron 


copper,  lumber,  labor — in  fact,  an  increase  in  all  commodities — and 
trie  building  up  our  Army  as  well  means  clothing,  shoes,  equipment 
of  all  kinds,  and  embracmg  again  many  commodities  that  are  already 
extremely  active. 

The  paper  business  follows  the  general  business  barometer  up  or 
down.  It  can  not  be  forced  upward  or  downward,  except  tempora- 
rily, unless  the  supply  and  demand  justifies  a  change.  It  is  a  com- 
modity too  great  m  volume  to  be  controlled,  and  as  there  is  every 
reason  to  feel  that  general  business  is  and  will  continue  to  improve, 
it  is  reasonable  to  assume  the  paper  business  will  also  improve. 

There  have  been  efforts  made  to  depress  prices.  The  Government 
has  exercised  its  power;  the  pubhshers  have  used  the  press,  giving 
great  publicity  to  charges  of  extortion,  combination,  and  restraint  of 
trade;  but  withal  the  prices  have  remained  firm — and  why  ?  Because 
they  were  and  are  justified  by  costs  and  supported  by  the  invulner- 
able law  of  consumption. 

Many  jobbers  argue  that  the  prices  were  advanced  beyond  the 
points  justified  by  manufacturing  cost,  but  lose  sight  of  the  fact  that 
the  demand  and  not  the  cost  of  manufacture  is  the  most  potent  fac- 
tor in  the  regulation  of  prices.  They  now  argue  that  as  the  demand 
is  off  that  the  prices  must  dechne,  but  they  do  not  consider  that  dur- 
ing the  period  when  the  gap  between  the  reasonable  profit  above 
manufacturing  costs  and  the  sale  price  that  the  former  has  been  con- 
stantly increasing,  while  the  latter  has  been  stable,  and  the  margins 
over  present  manufacturing  costs  are  no  greater  to-day,  if  as  gi-eat, 
as  during  the  years  1914  and  1915,  and  any  reduction  in  prices,  ex- 
cept for  readjustment  purposes,  would  be  illogical  and  imbusinesshke. 


May  25,  1917. 

Dear  Sir:  Replying  to  your  letter  of  May  21,  we  give  you  below 
the  writer's  opinion  of  present  and  future  market  conditions. 

The  writer's  recent  report,  which  you  saw,  gave  reasons  for  the 
present  apparent  depression  in  prices.  Since  that  time  further  inves- 
tigation has  been  made,  with  the  following  deductions: 

1  beheve  that  the  market  has  gone  as  lovv  as  it  will  go  and  that  on 
some  commodities  there  will  soon  be  a  reaction  and  a  stiffening  in 

E rices.  I  do  not  look  for  any  spasmodic  changes  on  the  general  hues, 
ecause  the  writer  has  been  of  the  opinion  all  the  time  that  none  of 
the  prices  made  by  mills  during  1916  were  warranted  by  increased 
manufacturing  costs,  but  were  justified  solely  because  of  tlie  demand 
for  the  papers. 

What  the  future  may  have  in  store  for  us  is  a  serious  problem. 
There  are  several  important  factors  that  could  and  may  seriously 
affect  manufacturing  conditions,  the  demand,  and  prices.  These  fac- 
tors are  the  questions  of  a  supply  of  coal,  a  supply  of  pulp  wood  and 
pulp,  a  supply  of  labor  and  of  railroad  equipment. 

The  demand  for  coal  for  the  next  year  or  two,  or  until  the  end  of 
the  war,  is  going  to  be  excessive.  The  allies  are  now  practically 
dependent  upon  us  for  their  supply.  Our  Government  has  admitted 
this.  Therefore  they  wiU  have  the  fii*st  call  on  what  is  mined.  Pub- 
he  utihties  and  transportation  companies  and  coal  for  private  uses 
12159°— S.  Doc.  79,  65-1 8 


114 


BOOK-PAPER  INDUSTRY. 


wm   become  second,   with  war-essentiaJ   manufacturing   industries 
third   and  nonessential-manufacturing  industries  fourth.     The  paper 

'^^n^7  ^^^''''^  '^  ^^^  ^T*^>  ^^«^^'  consequently  there  mav  be  great 
difficulty  in  securmg  sufficient  coal  to  operate  paper  mids.  TMs 
would  create  a  scarcity  of  paper,  and  a  consequent  advance  in  price. 
Ihe  matter  of  shortage  of  wood— the  wood  cut  in  Canada— has 
a^eady  been  given  you.  The  difficulty  arising  from  a  shortage  in  tl^ 
cut  of  spruce  wood  may  be  accentuated  by  the  fact  that  unlL  what 
J^nn«  w-ll'"'^  ''  received  at  the  mills  at  a  time  when  the  water  bZu- 
tions  wUl  permit  of  its  being  ground,  wliich  wiU  create  a  greater  short- 
age  than  nas  already  been  estimated. 

Another  important  factor  is  that  of  labor.  The  paper  industrv 
being  m  the  nonessential  class,  will  be  more  seriously  affected  bv 
conscription  than  some  other  industries.  An  experienced  paper- 
machine  tender  or  paper  maker  can  not  be  made  over  night,  and 
.T\FTu  "^"^^  Y^  doubtless  be  crippled  by  reason  of  losing 
vduabfe  laborers.  A  radical  change  in  the  We  o*!f  any  mill  uniavor- 
ably  results  m  a  reduced  production  and  a  lowering  o?  the  quahties 
This  factor  may  become  so  extensive  as  to  seriously  affect  the  amount 
of  paper  production  m  the  United  States,  and  prices  will  theref^e 
be  affected  by  reason  of  a  shortage  in  production 

Fin''if^l^  ""^^  ^^P^^^^^^  ^^^t«^  is  tU  Question  of  transportation. 
Even  if  the  mills  can  secure  wood,  coal,  lAor  and  are  able  to  run  to 
full  capacity,  if  the  railroads  are  not  able  to  handle  the  stock  andVet 
It  away  from  the  mill  a  real  shortage  of  paper  will  ine vitabl v  result  and 
prices  consequently  be  mrde  much  firmer.     At  present  the  transpor 
tation  facdities  are  inadequate  to  handle  the  business  of  the  countrv 
Under  present  conditions  the  Government  will,  if  necessary    com- 
mandeer cars  for  the  transportation  of  such  commodities  as  theV  mav 
wfjn  t/  P^^^^^f  ^^n  of  the  war  for  handling  men  and  materials 
We  will  have  soon  facing  us  the  matter  of  handling  the  crops 

The  writer  is  of  the  opinion  that  by  September  or  October  there 
will  be  great  difficulty  experienced  on  account  of  the  railroads  bein^ 
unable  to  handle  the  busmess  of  the  country,  and  wUl  place  embar-oef 
on  such  hnes  as  are  considered  nonessentials.  Unfortunatelv  the 
paper  line  has  been  put  in  that  class.  To  us  it  is  certai^d^  esseAt  d 
and  unl^s  we  prepare  for  it,  it  is  going  to  affect  us  and  our  trade  very 
materially.  1  am  of  the  opmion  that  we  should  graduaUy  incrlas^ 
our  stocks  and  be  prepared  for  the  difficulties  whidi  I  fear  weshaU 
encounter  before  the  first  of  the  year. 
Yours,  truly, 


Exhibit  5. 


EXTRACTS  FROM  INTERVIEWS  WITH  AND  STATEMENTS 
MADE  BY  JOBBERS  GIVING  REASONS  FOR  THE  ADVANCE 
IN  PRICE  IN  1916. 

DETROIT,    MICH. 

Analysis  of  the  trend  of   the  book-paper  market  in  the  last  12 

months  according  to  officials  of  involves  recognition  of  the 

fact  that  there  was  a  tremendous  amount  of  overbuying  in  1916, 
both  among  jobbers  and  consumers.  This  was  true  it  was  stated 
both  of  their  own  company  and  practically  all  the  important  jobbers 
and  consumers  with  whom  they  had  business  relations.  As  an 
example,  it  was  stated  that  a  certain  customer  for  whom  a  large 
order  was  filled  in  1916,  recently  returned  a  car  of  paper  which  did 
not  conform  to  specifications  and  at  the  same  time  expressed  a  desire 
to  have  deUvery  of  the  corrected  order  postponed  lor  six  months. 
In  explanation  the  customer  stated  that  his  warehouse  was  full  and 
that  he  had  no  place  to  store  the  paper  and  would  have  no  use  for  it 
for  several  months. 

Owing  to  the  uncertain  outlook  from  a  business  standpoint  con- 
sumers in  lieu  of  placing  new  orders  are  now  utilizing  the  reserved 
stock  accumulated  in  1916,  which  has  recently  resulted  in  a  reduction 
in  prices.  Inquiries  by  telephone  for  orders  from  Chicago,  Cincinnati, 
ana  other  distributing  centers  are  said  to  be  of  daily  occurrence. 
Some  of  the  western  mills  have  recently  cut  prices  as  much  as  2  cents 

Eer  pound,  or  below  actual  cost  of  production,  in  case  of  mills  which 
uy  their  pulp.  In  view  of  the  hign  price  of  pulp,  it  is  claimed,  it  is 
out  of  question  for  prices  to  decline  any  further.  From  present 
indications  there  will  be  no  foreign  pulp  available  during  present 
year  and  the  price  of  domestic  pulp  is  Hkely  to  advance  on  account 
of  the  scarcity  of  labor  and  the  difficulty  of  pulp  mills  in  securing 
wood.  If  business  conditions  continue  good,  these  factors  are  ex- 
pected to  bring  about  an  advance  in  prices  to  a  higher  level  than 
existed  in  1916,  as  the  present  reserve  stocks,  as  a  whole,  are  suffi- 
cient for  only  a  few  months  and  consumers  will  necessarily  enter 
the  market  again  in  a  short  time. 


Jobber  stated  that  it  was  due  largely  to  a  panic  among  the  large 
consumers,  who  insisted  on  the  full  quantity  contracted  for  being  de- 
livered, and  also  bought  in  the  open  market  all  they  could  carry. 
This  created  a  demand  in  excess  of  the  supply  and  forced  the  price 
up.  The  opposite  condition  exists  to-day.  The  consumers  are  work- 
ing on  their  old  stocks,  the  jobbers'  business  is  below  normal,  and 


the  manufacturers  are  looking  for  orders. 


U5 


,.il 


I 

■'I 


•I ' 


116 


BOOK-PAPER  INDUSTRY. 
BOSTON,    MASS. 


Informant  declares  that  he  does  not  know  of  any  artificial  means 

^n^*^  *°  Z'""!*  *^^  P"^^-  T^^^  ^^^'"'^  t°°k  place  so  suddeZ 
that  no  opportunity  was  given  the  jobbers  to  loacf  up  and  thereby 
create  a  scarcity.  The  company  has  not  at  any  time  Ld  an  abnor- 
md  stock  on  hand.  While  the  peak  of  high  prices  has  proUbly 
now  been  reached,  prices  will  not  decline  very  much  until  the  close 
01  tne  war. 

NEW  YORK   CITY. 

When  asked  as  to  his  opinion  of  the  reason  for  the  hicrh  prices 
informant  stated  that  it  was  due  to  supply  and  demand:  to  tL  in- 
creased cost  of  raw  materials,  labor,  etc.,  and  somewhat  to  the 
pamcky  bidding  of  the  publishers.  A  mill  haying  all  the  orders 
they  could  handle  would  put  their  prices  considerably  above  the 
market  price  to  discourage  orders,  tut  without  success,  as  many 
publishers  demanded  paper  at  almost  any  price 

As  to  shortage  of  paper,  he  stated  that  a  great  many  pubhshers 
and  printers  had  bought  great  quantities  of  paper-fa/ more  than 
needed— and  had  it  put  in  storage. 

Regarding  rehef  in  the  situation  he  stated  that  if  the  present 
quietness  m  the  paper  market  would  prevail  for  a  few  more  months 
the  market  would  probably  soften  quite  appreciably,  but  not  as 
low  as  formerly  because  of  the  greatly  increased  cost  of  production 
However,  informant  does  not  feel  confident  that  this  condition  will 
prevail  and  expects  that  still  higher  prices  will  come-because  of 
tne  publishers  demanding  more  paper. 


Informant  thinks  that  prices  have  advanced  (1)  because  the  mills 
are  paying  much  more-  for  their  raw  materials,  and  (2)  because  the 
demand^has  increased  so  greatly  that  supply  can  not  keep  up  with 

The  pubhshers,  he  said,  all  are  using  more  paper,  want  stiU  more, 
and  go  into  the  market  and  offer  higher  and  h^gter  prices  for  it,  and 
of  course  when  such  an  imtiative  as  that  is  taken,  prices  are  certain 
to  go  on  up.  ^ 

ih^'  ~^'  ^'""^  president  of  this  concern,  had  previously  stated 
the  same  thing  concerning  the  publishei^'  making  bids  in  the  market 
as  a  result  of  a  pamcky  feehng  that  they  could  not  get  as  much  paper 

f  ^  •!L'^u-^-  .^'  '^i^  ^^^\  ^  ^^^y  ^^^^^  «^y  content  themselves 
by  withholding  from  the  market  as  much  as  possible  for  a  few  months 
the  pnce  of  paper  would  begin  to  dechne.  No  one,  he  thought, 
could  blame  the  miU  or  the  jobber  for  taking  up  a  high  price  for 
paper  when  a  pubhsher  rushes  in  and  offers  it  voluntarily 

He  said  also,  that  he  thought  the  mills  were  making  much  better 
prices  to  the  niagazme  publishers  than  to  the  book  publishers  as 
they  know  the  latter  can  raise  their  prices  on  books  while  the  former 
can  not  raise  the  price  of  magazines.  luimer 

He  also  pointed  out  that  the  miUs  had  trouble  in  getting  laborers- 
that  he  understood  they  were  offering  as  much  as  $2.50  a  cord  to' 
woodcutters  and  could  not  get  the  men  ^^u  tu 


BOOK-PAPER  INDUSTRY, 


ROCHESTER,    N.    Y. 


117 


The  cost  of  everything  going  into  paper  has  advanced  and  while 
the  manufacturer  producing  his  own  wood  and  chemical  pulp  has 
made  very  large  profits  he  could  probably  have  made  nearly  as 
much  by  selling  the  raw  materials  on  the  open  market. 

There  has  not  been  much  difficulty  in  securing  book  paper.  While 
the  price  has  advanced,  dehveries  for  standard  grades  have,  as  a 
rule,  been  very  prompt. 

CLEVELAND,  OHIO. 

With  respect  to  market  conditions  informant  stated  that  book 
paper  prices  at  the  present  time  are  reacting  to  soine  extent  from  the 
high  levels  of  1916.  This  is  attributed  in  part  to  utihzation  of  reserve 
stocks  accumulated  during  the  period  of  advancing  prices  and, 
indirectly,  to  uncertainty  as  to  the  trend  of  prices  in  general  in  the 
near  future.  Owing  to  unsettled  market  conditions,  the  pubhcation 
of  catalogues,  which  normally  involves  a  large  consumption  of  book 
paper,  has  been  greatly  curtailed;  manufacturers  being  unwilling  to 
commit  themselves  as  to  prices  for  more  than  a  short  period.  Tlfis 
factor  has  influenced  the  demand  for  both  machine  finished  and  super- 
calendered  paper,  and  to  a  greater  extent  the  coated  paper  market, 
which  has  been  dull  for  several  months.  He  also  stated  that  repre- 
sentatives of  western  book  paper  mills  have  recently  canvassed 
Cleveland  jobbers  unsuccessfully  in  an  effort  to  secure  orders  for 
book  paper.  The  eastern  book  mills  have  for  the  most  part  con- 
tracted their  entire  output  for  the  current  year  and  are  not  sohciting 
any  business. 

In  connection  with  the  curtailment  of  domestic  consumption  there 
has  been  a  reduction  in  the  export  demand  for  book  paper.  During 
the  past  month  export  orders  from  South  America  were  canceled 
by  cable  in  several  instances,  prior  to  the  receipt  of  the  orders  which 
came  by  mail.  The  cancellation  of  these  orders  is  attributed  to  the 
same  factors  which  have  reacted  on  the  domestic  market. 

BUFFALO,  N.  Y. 

Informant  said  that  while  there  has  been  some  increase  in  the  cost 
of  production  because  of  the  demands  of  labor  both  in  the  mills  and 
in  the  woods  and  because  of  the  increased  cost  of  coal,  wires,  etc., 
it  has  not  been  suflficient  anywhere  near  to  justify  the  increase  which 
actually  has  taken  place.  By  far  the  greater  part  of  the  increase  has 
been  due  to  the  abnormal  demand  upon  the  manufacturers  of  pub- 
hshers, printers,  and  hthographers.  That  the  demand  is  normal  or 
subnormal  now  is  evidenced  by  the  fact  that  an  order  now  placed 
with  the  mill  will  be  on  the  machine  inside  of  48  hours,  while  last 
fall  it  took  2  or  3  weeks,  and  for  special  or  odd  sizes  2  or  3 
months.  As  to  the  future  prices  he  said,  that  while  normally  they 
would  not  reach  the  low  level  of  1915,  but  probably  would  be  be- 
tween 5  and  6  cents  per  pound.  The  reason  for  the  present  dechne 
m  price  not  being  more  abrupt  is  due  to  the  probable  effect  upon  the 
paper  industry  of  the  war  measures  now  being  acted  upon  by  Con- 
gress.    Paper  is  in  the  '* nonessential"  class  and  this  lays  the  em- 


K 


I 

;! 


118 


BOOK-PAPER   INDUSTRY. 


ployees  of  paper  manufacturers  open  to  conscription.  Abo  it  will 
cause  wood,  coal,  pulp,  and  other  raw  materials  for  paper  manu- 
facture to  be  discriminated  against  in  the  matter  of  securing  shipping 
facilities.  The  raih-oads  will  not  object  to  this,  because  these  raw 
materials,  bemg  of  low  grade  and  bulky,  carry  a  low  freight  rate, 
and  the  railroads  will  be  glad  to  favor  higher  class  freight  with 
higher  freight  rates. 

CHICAGO,    ILL. 

Officials  of  the Co.,  in  common  with  other  jobbers,  asserted 

that  consumers  themselves,  through  the  accumulations  of  large  re- 
serve stocks  in  1916  were  responsible  in  part  for  the  price  advance  of 
the  past  year.  When  requested  to  furnish  details  they  were  unable 
to  cite  any  specific  instance  of  overbuying,  but  insisted  that  the 
practice  had  been  general  and  had  been  a  material  factor  in  brmdng 
on  nigner  prices.  °    ° 


Exhibit  6: 


EXTRACTS  FEOM  INTERVIEWS  WITH  AND  STATEMENTS 
MADE  BY  PULLISHERS  GIVING  REASONS  FOR  THE  ADVANCE 
IN  PRICE  IN  1916. 

A  publisher  in  western  New  York  made  the  following  statement: 

1.  I  believe  that  there  is  a  shortage  of  wood  pulp  and  chemicals 
used  in  the  manufacturing.  It  would  seem  reasonable,  when  you 
consider  how  many  men  in  this  world  are  now  engaged  in  military 
operations.  • 

2.  There  is  commercial  unrest  in  the  paper  market.  Consumers 
wondering  whether  the  price  is  going  to  increase  or  whether  they 
will  be  able  to  get  their  supplies  at  aU.  In  a  great  many  instances 
I  think  this  leads  to  unusual  buying,  which  would  of  course  make  an 
increased  demand  for  the  article. 

3.  There  is  an  increase  in  the  price  of  almost  everything  at  the 
present  time;  this  of  course  has  its  effect  on  paper;  but  it  seems  to 
me  as  though  every  person  having  to  do  with  the  manufacture  or 
the  sale  of  paper  was  inclined  to  ''do  his  bit"  in  increasing  the  prices. 
In  other  words,  if  A  raises  his  price  why  shouldn't  B  raise  his?  C 
and  D  and  the  rest  of  the  alphabet  don't  want  to  let  the  opportunity 
pass. 

4.  There  is  of  course  almost  an  entire  suspension  of  imported  paper 
and  wood  pulp. 

interviews   with   new   YORK   PUBLISHERS. 

No  definite  information,  according  to  informant,  is  given  out  by 
the  mills  and  the  jobbers  as  to  what  the  causes  have  operated  to 
bring  about  the  rises  of  book-paper  prices.  They  all  give  as  their 
reasons  merely  that  of  the  increased  cost  of  materials.  He  has  no 
definite  knowledge  upon  which  to  base  his  belief,  but  he  believ.  s  that 
the  price  of  book  paper  is  all  out  of  proportion  to  the  cost  of  manu 
facturing. 


Informant  cited  the  usual  causes  for  the  high  price  of  paper,  such 
as  increased  cost  of  labor  and  of  raw  materials.  In  adaition  he 
called  attention  to  the  statement  made  by  Judge  Moore,  head  of  the 
statistical  bureau  for  the  manufacturers  of  paper,  in  which  he  stated 
that  the  mills  had  suffered  in  the  past  from  lean  years  and  now  that 
the  opportunity  was  at  hand  to  fatten  up,  they  felt  justified  in  doing 
so.  He  considers  that  the  prices  for  machine-finished,  supercalen- 
dered,  and  coated  papers  are  all  out  of  proportion  to  the  increased 
cost 'and  that  the  mills  and  the  jobbers  are  simply  robbing  the  public, 

119 


(  ' 


120 


BOOK-PAPER    INDUSTRY. 


M 


\\ 


f<.-.^!i  ';'?P^'**«'^'  also,  that  increased  domestic  consumption  has  af- 
fected the  market  especially  that  on  the  part  of  litSDher^and 
prmtmg  houses.     He  £as  not  heard  of  greatly  increased^ex^Srt^tfon 


BOOK-PAPER  INDUSTRY. 


121 


Infonnant  is  not  of  the  opinion  that  there  is  any  coUusion  amon<r 
Sm  tSe  r^nif '  i^^'^'^'^fi'tho^gh  he  does  find  that  the  iiTotS 

He  account  foTthi^'  1°}^''"  ""^  °"*''^  ^^^^^^  j"^*  ^^out  the  same 
selle^  sZdIv  w«tnh  th  ^""u"";  by  saymg  that  he  believes  that  the 
sellers  simpjy  watch  the  market  and  watch  each  other  verv  car^fullv 
and  make  quotations  which  are  practically  the  same  ^  ^^a'^^l^''^ 


Informant  stated  the  company  had  made  no  effort  to  contract 
for  paper  durmg  the  present  year  and  would  not  be  in  the  market 

mucffowe?''Erest?ttd''r  ?^  fVly-  when  he  expected  p/ic'es  to  be 
than  customary,  and  that  this  undoubtedly  had  tended  To  create 

u|S"i^fc  s  Sit- f.=^  .£7wt;teH 


Informant  was  of  the  opinion  that  there  have  been  iust  raiwp,  fnr 
some  increase  m  the  price  of  book  paper,  such  as  advlnce  in  cost  of 
W  ™,Kfi°^  '^^  materials,  but  he  waLonvinced  that  the  Pricepari 
by  publishers  was  all  out  of  proportion  to  the  costs  *  *  ^*  Xpn 
paper  salesmen   he  Said,  admit  that  the  prices  are  exorbitant      tZ 

^TaT^  f  i^'^'?^  ^'^•'^  *1^«  '"^'^  cou/explorthe  consumers  Ind 
they  did  not  hesitate  to  do  it,  as  is  evidenced  by  the  Zt  thTt 
although  some  of  them  have  been  unable  to  pay  dividends  they  ^r^ 

STATEMENTS   BY   BOSTON  PUBLISHERS. 

«f  ^fi'fin^'^  contract,  entered  into  about  October  15,  1916  was  nlaced 
at  $6.60  per  hundred  pounds.    At  the  tune  of  making  thb^ontract 
we  conferred  with  other  paper  manufacturers  and  Sers  but  with 
out  being  able  to  get  a  better  price.     In  fact,  it  was  difficult  t^^^^ 
any  concern  to  consider  our  proposition,  as  tW  dakied  to  L  ' 
well  occupied  m  taking  care  of  their  own  custLp^     Tvl      • 
named  to  us  were  contiderably  in  excess  of  the Se  oioteTbv 
*    *    *,  which  we  finaUy  accepted.     In  this  canva?^  ofThe  trad. 


Rise  in  cost  of  wood  pulp,  in  cost  of  clay,  chemicals,  and  other  minor 
materials;  in  coal;  in  labor;  and  in  the  working  of  the  law  of  supply 
and  demand.  The  very  great  decrease  in  the  importation  of  foreign 
pulp,  the  increased  domestic  demand  caused  by  general  business  con- 
ditions, and  the  greatly  increased  foreign  demand  for  paper  from 
countries  whose  normal  supply  has  been  cut  off  by  the  war,  are 
strong  factors.  There  is  no  doubt,  also,  that  under  present  condi- 
tions book-paper  mills  are  enabled  to  make  somewhat  better  percent- 
age of  profit  than  for  some  years  past,  and  are  taking  advantage 
of  that  opportunity.  We  have  no  reason  to  believe  that  the  mQls  with 
whom  we  do  business  have  gone  to  excess  in  the  matter.  There 
is  good  reason  to  believe,  however,  that  the  manufacturers  of  pulp 
as  distinguished  from  the  manufacturers  of  paper  are  enabled  to 
demand  and  do  receive  from  the  paper  mills  prices  100  per  cent  or 
more  in  excess  of  those  prevailing  in  1915,  and  that  this  increase  is 
the  largest  single  item  in  the  increased  price  of  white  book  paper. 


A  Philadelphia  publisher  made  the  following  statement: 

Concerning  the  great  advance  in  the  price  of  paper  we  feel  that 
there  is  some  measure  of  justice  on  the  paper  maker's  side.  We 
feel  that  the  profit  on  paper  in  the  past  has  probably  been  too  close, 
so  that  the  increasing  of  mvestment  in  paper-making  machinery  has 
not  been  sufficiently  profitable.  Then  when  an  unprecedented 
demand  situation  arises,  aggravated  of  course  by  unprecedented 
labor  and  material  prices,  curtailment  of  normal  importations, 
abnormal  export  demand,  etc.,  there  is  not  the  elasticity  for  increasing 
the  paper  supply  that  there  otherwise  would  be. 

Of  course,  the  present  market  price  of  paper  represents  the  infla- 
tion of  present  abnormal  world  conditions  just  as  does  the  market 
price  of  other  commodities  at  the  present  time.  When  the  inevitable 
readjustment  of  prices  downward  occurs  (which  we  hope  will  not  be 
long  delayed)  we  feel  it  will  be  to  the  advantage  of  the  publisher  as 
well  as  the  paper  maker  if  a  paper  price  can  be  maintained  sufficiently 
above  the  former  low  levels  to  give  the  paper  maker  a  fair  profit. 

A  Chicago  publisher  wrote  as  follows: 

The  reason  as  given  us  by  people  interested  in  the  manufacture  of 

Eaper  was  primarily  the  shortage  of  pulp.  Presumably  this  is  true, 
ut  whether  the  shortage  of  pulp  justified  such  a  tremendous  increase 
in  price  is  another  matter.  Most  likely  not,  so  far  as  the  question  of 
making  a  proper  profit  is  concerned.  But,  given  a  shortage  of  any 
commoditj^,  the  price  advances  beyond  all  proportion  to  the  cost 
of  production. 

We  do  not  believe  there  has  been  any  price  fixing  among  manufac- 
turers; at  least  no  evidence  of  anything  of  the  kind  has  ever  come  to 
Practically  there  has  been  no  need  for  it.     The  market  price  for 


us. 


paper  has  been,  all  things  considered,  about  the  same  everywhere. 
We  mean  by  this  that  the  product  of  one  manufacturer  is  sellinty 
relatively  at  about  the  same  price  as  that  of  another.  This  might 
look  like  a  trade  agreement.  We  do  not  think  it  is  so.  Very  high 
or  very  low  prices  do  not  come  as  the  result  of  agreements. 

Previous  to  the  war  there  was  plenty  of  paper  pulp  in  the  country, 
and  paper  was  very  cheap — so  cheap,  indeed,  that  few  manufacturers 


>\ 


122 


BOOK-PAPER    INDUSTRY. 


S^if/nlfTY  Of  a  combination  of  manufacturerto  adjust  JS 
We  do  nnt  fil   T^f ''%?*?//  ^'»  ^^^'  get  back  to  the  old  pr  ces 


Exhibit  7. 


TRADE  CUSTOMS  AS  ADOPTED  BY  THE  BOOK  PAPER  DIVI- 
SION OF  THE  AMERICAN  PAPER  AND  PULP  ASSOCIATION, 
MAY  1,  1912,  AND  LIST  OF  STANDARD  SIZES  AND  WEIGHTS 
OF  BOOK  PAPER. 

BOOK  PAPER  DIVISION. 

Terms. — All  sales  to  be  on  a  basis  of  cash  in  30  days  less  3  per  cent. 

Prices. — ^The  base  selling  price  shall  be  for  paper  unpacked,  in 
rolls  or  sheets. 

Clairris. — Damaged  paper  must  be  reported  and  claims  entered 
immediately,  so  that  it  may  be  inspected  oef ore  used. 

Cost  ofyacking. — Additional  cost  of  packing  to  be  added  as  follows: 

Rolls  01  not  less  than  500  pounds  net  of  paper,  wrappers  not  to 
exceed  3  per  cent  of  billing  weight,  5  cents  per  100  pounds. 

Rolls  of  less  than  500  pounds  net  of  paper,  and  not  less  than  250 
pounds,  wrappers  not  to  exceed  3  per  cent  of  billing  weight,  10  cents 
per  100  pounds. 

Rolls  protected  by  wooden  heads  and  rods,  containing  not  less 
than  500  pounds  net  of  paper,  wrappers  not  to  exceed  3  per  cent  of 
billing  weight,  15  cents  per  100  pounds. 

Sheets  in  interlapped  bundles  of  not  less  than  150  pounds  net  of 
paper,  wrappers  and  twine  not  to  exceed  3  per  cent  of  bilhng  weight, 
10  cents  per  100  pounds. 

In  cases  of  not  less  than  550  pounds  net  of  paper,  case  hnings  not 
to  exceed  1  per  cent  of  billing  weight,  25  cents  per  100  pounds. 

In  skeleton  frames  containing  not  less  than  150  pounds  net  of 
paper,  wrappers  and  twine  not  to  exceed  2  per  cent  of  billing  weight, 
25  cents  per  100  pounds. 

In  solid  board  frames  not  less  than  180  pounds  net  of  paper, 
wrappers  and  twine  not  to  exceed  2  per  cent  of  bilhng  weignt,  40 
cents  per  100  pounds. 

Weights. — Wrappers,  case  Unin^s,  and  twine  shall  not  be  included 
in  the  scale  or  ream  weight  at  which  the  paper  is  charged  to  purchaser. 

To  be  as  close  as  possible  to  the  weight  ordered,  subject  to  a  pos- 
sible variation  in  the  nominal  weight  not  exceeding  5  per  cent  above 
or  below  the  ordered  weight.  Paper  within  this  range  to  constitute 
a  good  deUvery. 

To  be  stenciled  with  the  weight  made,  so  marked  by  the  manu- 
facturer, and  there  shall  be  no  evasion  by  substituting  letters  or 
symbols  for  figures. 

Weight  ordered  to  be  billed,  unless  shortage  is  in  excess  of  2 J  per 
cent,  in  which  case  it  shall  be  billed  at  actual  scale  weight. 

123 


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124 


BOOK-PAPER   INDUSTRY. 


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bv  38  '.o'nnPTi  ^fi°^u2^  ^y  38,  Jo  pounds   to  and  including  25 
V«r'i  f  "°*^'j*2  ^0°  ^^^^^'  5  cents  per  100  pounds  "'*''"'^''=  ^^ 

pef  roo  SdT'  '''*'"  ''  '^  '''  ^0  P""'^'^^  toVsheets,  10  cents 
wefZ^'K?;/  '^^y/8'  50  pounds  to  500  sheets.  For  lighter 
wSt  eSLrd'jrilows"^''"^^''*"-^  *°  ^^  ^^^«^  accord4  to 

byg  4^f rn^to^^^^^^^^^^      -S'pts  -''^"^^  - 

peffoq  po'r'  '^'°"  ''  ^^  3«'  Ss'pounds^o  500  sheets,  10  cents 

Special  making  orders.—Lots  of  less  thnn  91  fr.no  f^  "k      i,         i 
''S  P-,10"  P?-d«  --  and  "thVbVseTelt^ptr^^*^  '' 
custS;  rbe"iTte1-^Th  tS^'^at^hr'  ^^f «- 

uni^r!,^a;;atefbltSVry '^  "'"™^'^'  ^'^'^  ^  P'^P-  *^1^-  ^.ack 

priceT/clTan  Xe"S'  '^  """'  *°  ^^  '^'"-^  ^-'  --P*  at  the 
In  billing  paper,  no  allowance  to  be  made  for  waste 

JLess  than  2  tons,  15  per  cent  over  or  under, 
iwo  to  5  tons,  10  per  cent  over  or  under 
Jf^ive  to  20  tons,  5  per  cent  over  or  under 
Iwenty  tons  upward,  3  per  cent  over  or  under. 

BOOK  PAPER   SIZES   AND   WEIGHTS. 

from  the  NXndl'^Dor  TrnH^Ac     "  f*^^  '^"^  "  committoo 

December  6,  me,  atTLKntXH^Ne^'Sk  O^^^^^^ 
basic  weights,  standard  stock  sizes  and  wekhte  anJ^rnn^'  '•'8?'^*^'"? 
paper  on  substance  or  thickness  b^k      ^      '    ^  '"^''^  ''^  ^"""^ 


BOOK-PAPER  INDUSTRY. 


125 


2.  The  basic  weight  of  supercalendered  book  remains  50  pounds  to 
the  ream,  in  size  25  by  38  inches  as  established  under  present  trade 
customs. 

3.  Additional  charges  for  weights  lighter  than  basic  weights  remain 
the  same  as  established  under  present  trade  customs. 

4.  Additional  charge  for  less  than  5,000  pounds  of  one  size  and 
weight,  but  of  irregular  "size''  or  irregular  "weight"  or  irregular 
"size  and  weight"  remains  same  as  established  under  present  trade 
customs. 

5.  Lots  of  5,000  pounds  or  more  of  one  size  and  weight  will  be 
made,  as  heretofore  established  under  present  trade  customs,  in 
irregular  "size"  or  irregular  "weight"  or  irregular  "  size  and  weight" 
without  extra  charge,  subject  only  to  additional  charge  for  "Hght 
weight"  if  order  bo  for  light  weight  paper. 

6.  As  heretofore  established  under  present  trade  customs,  no  extra 
charge  attaches  to  orders  for  2,000  pounds  or  more  of  one  size  and 
weight  where  both  "size  and  weight"  aro  "regular." 

7.  Orders  made  on  any  of  the  following  standard  stock  base 
weights  shall  be  "regular"  in  "weight,"  25  by  38,  40-pound,  50-poimd, 
60-pound,  70-pound,  80-pound,  100-pound. 

Note. — 45-pound  is  no  longer  a  "regular"  or  "standard"  stock  base 
weight,  but  like  other  "intermediate  weights"  will  be  made  in  lots  of 
5,000  pounds  or  more  without  extra  charge. 

8.  Orders  made  in  any  of  the  following  standard  stock  sizes  shall 
be  "regular"   in   "size": 


22  by  32 

28    by  42 

33  by  46 

41  by  61 

24  by  36 

28    by  44 

34  by  44 

42  by  56 

25  by  38 

29    by  52 

35  by  45 

44  by  56 

26  by  29 

30i  by  41 

36  by  48 

44  by  64 

26  by  40 

32    by  44 

38  by  50 

9.  Ordoi-s  for  5,000  pounds  or  more  of  one  size  and  weight,  "regular 
size"  or  "irregular  size,"  will  be  made  in  any  "intermediate  weight," 
such  as  basis  45-pound,  basis  56-pound,  basis  67-pound,  basis  78- 
pound,  basis  89-pound,  basis  94-pound,  without  extra  charge,  except 
for  "light  weight"  if  order  be  for  "hght  weight." 

10.  In  "stenciUng"  or  "marking"  packages  containing  book  paper, 
whether  bundles,  frames,  boards,  crates,  cases,  or  however  packed. 
All  information  as  to  so-called  "substance  weight,"  "thickness 
weight,"  or  "base  weight,"  to  bo  eliminated,  i.  e.,  left  off.  All 
packages  are  to  be  stenciled  with  size  and  weight. 

A.  H.  Nevius, 
Chairman  Committee,  Bureau  of  Statistics y 

Boole  Paper  Manufacturers 
Forest  Hopkins, 
Ohairrnan  Committee,  National  Payer  Trade  Association. 

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